Rema Tip Top Asia Pacific Pty Ltd v Grüterich

[2019] NSWSC 1594

Supreme Court

New South Wales

• Summary available

Medium Neutral Citation:

Rema Tip Top Asia Pacific Pty Ltd v Grüterich [2019] NSWSC 1594

Hearing dates:

6-8, 10, 13-15, 17 May 2019

Date of orders:

18 November 2019

Decision date:

18 November 2019

Jurisdiction:

Equity

Before:

Ward CJ in Eq

Decision:

1.   Declare that the plaintiff would have been justified in terminating the contract of employment between itself and the defendant on 16 March 2018 for serious misconduct by the defendant.
2.   Declare that moneys in respect of the car allowance, the double salary payments and the expenses said to be incurred under the claimed private business class travel budget (as opposed to the claimed business travel expenses on Mr Grüterich’s company credit card) totalling $187,037.67 were wilfully and dishonestly misappropriated by the defendant and that those moneys were impressed with a presumed or resulting trust and are held on trust by the defendant for the benefit of the plaintiff.
3.   Declare that those moneys, together with the moneys in respect of the bonus payment of $103,210.88 and the unauthorised credit card expenses (including the Poliform furniture deposit) totalling $21,413.75, that the defendant caused to be paid to himself or for his benefit in breach of his fiduciary duty not to make an unauthorised profit from his position, are held by the defendant subject to a constructive trust in the plaintiff’s favour.
4.   Order that, subject to the set-off ordered below, funds held in the HSBC bank account to the amount of $311,662.30 (being the total of the amounts the subject of the trust declarations in Orders 2 and 3 above) be released to the plaintiff.
5. Order that the defendant pay the following sums to the plaintiff (totalling $336,413.69) as damages (for breach of contract, in equity or under s 1317H of the Corporations Act 2001 (Cth) for breach of fiduciary or statutory duties owed by the defendant as managing director of the plaintiff) and/or by way of restitution:
(a)   Car allowance: $22,750.
(b)   Double salary: $69,999.99.
(c)   Bonus payment: $103,210.88.
(d)   Poliform furniture: $9,616.40.
(e)   Travel expenses: $94,287.68.
(f)   Annual leave overpayment: $24,751.39.
(g)   Other miscellaneous credit card expenses: $11,797.35.
6.   Order the payment of interest up to judgment on the above amounts.
7.   Order that the plaintiff pay to the defendant accrued long service leave calculated taking into account his employment within the Rema Group of companies from 25 October 2012 to the date of termination of his employment on 16 March 2018, with interest calculated up to judgment on that amount, but otherwise dismiss the defendant’s cross-claim.
8.   Order that the amounts payable pursuant to the plaintiff under Orders 4 and 5 be set-off against the amount ordered to be paid to the defendant under Order 7; with the remaining balance of the amounts so ordered to be paid to the plaintiff or the defendant, as the case may be, within 28 days.
9.   Reserve the question of costs to be dealt with on the papers following any further brief written submissions on that issue.
10.   Liberty to apply on three days’ notice for any variation necessary to correct any error in the calculation of the above amounts or otherwise in relation to the working out of the above orders.

Catchwords:

EMPLOYMENT AND INDUSTRIAL LAW — Contract — Termination — Termination on notice – whether the plaintiff was justified in terminating the employment contract of the defendant (its former managing director) – whether the plaintiff would have been justified in terminating summarily the defendant’s employment contract on the ground of serious misconduct – where information regarding unauthorised directions and payments made by the defendant were discovered after the termination – whether the contract was for a fixed term – held that the contract was not for a fixed term and the plaintiff was justified in terminating the employment contract and would have been justified in terminating summarily the defendant.

 

EQUITY — Equitable remedies — Restitution – Unjust enrichment – whether the plaintiff could recover the notice payment paid to the defendant – whether there was a factor rendering retention of the notice payment unjust – held that the payment was made voluntarily in circumstances where the plaintiff chose not to investigate further but to bring the employment to an end immediately.

 

CONTRACTS — Misleading conduct under statute — Misleading or deceptive conduct — Silence – whether necessary to establish reasonable expectation of disclosure,

 

EQUITY —Trusts and trustees — Resulting trusts –moneys misappropriated by the defendant held on presumed or resulting trust by the defendant for the benefit of the plaintiff – unauthorised profits in breach of the defendant’s fiduciary duties held by the defendant subject to a constructive trust in the plaintiff’s favour.

EMPLOYMENT AND INDUSTRIAL LAW — Leave — Long service leave – s 4(2)(a)(ii) of the Long Service Leave Act 1955 (NSW) – whether the defendant had been wrongly denied long service leave accruals on termination of his employment – held that the defendant was entitled to long service leave on the basis that his employment was terminated in lieu of notice and not for misconduct.

Legislation Cited:

Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law, ss 18, 31, 236
Corporations Act 2001 (Cth), ss 182(1), 183, 1317
Long Service Leave Act 1955 (NSW), ss 4, 5, 7
Trade Practices Act 1974 (Cth), s 52

Cases Cited:

ACN 074 971 109 (as trustee for the Argo Unit Trust) and Pegela Pty Ltd v National Mutual Life Association of Australasia Ltd [2006] VSC 507
Addenbrooke Pty Limited v Duncan (No 2) [2017] FCAFC 76
Agricultural and Rural Finance Pty Limited v Gardiner (2008) 238 CLR 570; [2008] HCA 57
Arhill Pty Ltd v General Terminal Co Pty Ltd (1990) 23 NSWLR 545
Australia & New Zealand Banking Group Ltd v Westpac Banking Corporation (1988) 164 CLR 662; [1988] HCA 17
BGC (Australia) Pty Ltd v Phippard [2002] WASCA 191
Bibby Financial Services Australia Pty Ltd v Sharma [2014] NSWCA 37
Black v S Freedman & Co (1910) 12 CLR 105; [1910] HCA 58
Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66; [1933] HCA 8
Bradley Mark Lum v MV Developments (Lane Cove) Pty Ltd (in liquidation) [2018] NSWSC 247
Breen v Williams (1996) 186 CLR 71; [1996] HCA 57
Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34)
Browne v Dunn (1893) 6R 67
Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25
Caswell v Sony/ATV Music Publishing (Australia) Pty Ltd [2012] NSWSC 986
Cenric Group v TWT Property Group [2018] NSWSC 1570
Ceramic Fuel Cells Ltd (in liq) v McGraw-Hill Financial Inc (2016) 245 FCR 340; [2016] FCA 401
Clouston & Co Ltd v Corry [1906] AC 122
Commercial Bank of Australia Ltd v Younis [1979] 1 NSWLR 444
Commonwealth Bank of Australia v Barker (2014) 253 CLR 169; [2014] HCA 32
Concut Pty Ltd v Worrell [2000] HCA 64; (2005) 75 ALJR 312
Coote v Kelly; Northam v Kelly [2016] NSWSC 1447
Cunningham v Australian Bureau of Statistics (2005) 148 IR 20
David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; [1992] HCA 48
Downer EDI Limited v Gillies [2012] NSWCA 333
Evans v Braddock [2015] NSWSC 249
Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22
Foskett v McKeown [2001] 1 AC 102
Fraser v NRMA Holdings Ltd (1995) 55 FCR 452
GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd (2003) 128 FCR 1; [2003] FCA 50
Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC 3560
Gloucester (Sub-Holdings 1) Pty Ltd v Chief Commissioner of State Revenue [2013] NSWSC 1419
Hawcroft General Trading Co Pty Ltd v Hawcroft [2017] NSWCA 91
Heugh v Central Petroleum Ltd [No 5] [2014] WASC 311
Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; [1984] HCA 64
In the matter of MSU Management Pty Ltd - Urusoglu v MSU Management Pty Ltd [2011] NSWSC 54
Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8
Katsilis v Broken Hill Pty Co Ltd (1977) 18 ALR 181
KD Kanopy Australasia Pty Ltd v Insta Image Pty Ltd [2007] FCA 481
Kelly v Solari (1841) 9 M & W 53; 152 ER 24
Koompahtoo Local Aboriginal Land Council v Sanpine Pty Limited (2007) 233 CLR 115; [2007] HCA 61
Lahoud v Lahoud [2010] NSWSC 1297
Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd (No 3) [2014] WASC 162
Lumbers v W Cook Builders Pty Ltd (In Liq) (2008) 232 CLR 635; [2008] HCA 27
Matter Technology Ltd v Mrakas; Mrakas v Matter Technology Ltd [2018] NSWSC 507
McDonald v Parnell Laboratories (Aust) Pty Ltd [2007] FCA 1903
Melbourne Stadiums Ltd v Sautner (2015) 229 FCR 221; [2015] FCAFC 20
Metalcorp Recyclers Pty Limited v Metal Manufactures Limited [2003] NSWCA 213; (2004) ATPR (Digest) 46-243
Miller & Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd (2010) 241 CLR 357; [2010] HCA 31
Miller v Sunland Park Pty Ltd [2014] FCCA 89
Mirus Australia Pty Ltd v Gage [2017] NSWSC 1046
Moody Kiddell & Partners Pty Ltd v Arkell [2013] FCA 1066
Moses v Macferlan (1760) 2 Burr 1005; 97 ER 676
MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2018] UKSC 24; [2018] 2 WLR 1603
North v Television Corp Ltd (1976) 11 ALR 599
Norwich Union Fire Insurance Society Ltd v William H Price Ltd [1934] AC 455
Owston Nominees No 2 Pty Ltd v Clambake Pty Ltd (2011) 248 FLR 193; [2011] WASCA 76
OXS Pty Ltd v Sydney Harbour Foreshore Authority [2016] NSWCA 120
Pilmer v Duke Group Ltd (In Liq) (2001) 207 CLR 165; [2001] HCA 31
Portelli v Polar Fresh Cold Chain Services Pty Ltd (t/as Polar Fresh) [2016] FWC 3519
Rankin v Marine Power International Pty Ltd [2001] VSC 150; (2001) 107 IR 117
Rema Tip Top Asia Pacific Pty Ltd v Gruterich [2018] NSWSC 591
Robb Evans of Robb Evans & Associates v European Bank Ltd (2004) 61 NSWLR 75; [2004] NSWCA 82
Sabre Corporation Pty Ltd v Russ Kalvin’s Hair Care Company (1993) 46 FCR 428
Salib v Gakas; Newport Pacific Pty Ltd v Salib [2010] NSWSC 505
Sargent v ASL Developments Ltd (1974) 131 CLR 634; [1974] HCA 40
Schneider v Caesarstone Australia Pty Ltd [2012] VSC 126
Semrani v Manoun; Williams v Manoun [2001] NSWCA 337
Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359; [1931] HCA 21
State Bank of New South Wales v Commissioner of Taxation (1995) 62 FCR 371; (1995) 132 ALR 653
Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245; [1988] HCA 11
Ta Lee Investment Pty Ltd v Antonios [2019] NSWCA 24
Traderight (NSW) Pty Ltd v Bank of Queensland Ltd [2015] NSWCA 94
Wambo Coal Pty Ltd v Ariff [2007] NSWSC 589
Wasada Pty Limited v State Rail Authority of New South Wales (No.2) [2003] NSWSC 987
Watson v Foxman (1995) 49 NSWLR 315
Willis Australia Group Services Pty Ltd v Mitchell-Innes [2015] NSWCA 381
Yabsley v MLC Limited [2017] NSWSC 832

Texts Cited:

C Mitchell, P Mitchell and S Watterson , Goff & Jones The Law of Unjust Enrichment (9th ed, 2016, Thomson Reuters)
G D Pont et al, Halsbury’s Laws of Australia (Lexis Nexis)
J D Heydon, M J Leeming and PG Turner, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (5th ed, 2014, LexisNexis)
K Mason, J W Carter, G J Tolhurst, Mason and Carter’s Restitution Law in Australia (3rd ed, 2016, LexisNexis)
M Pittard and R Naughton, Australian Labour and Employment Law (1st ed, 2015, LexisNexis)

Category:

Principal judgment

Parties:

Rema Tip Top Asia Pacific Pty Ltd (Plaintiff)
Christian Grüterich (Defendant)

Representation:

Counsel:
N Furlan and JC Lee (Plaintiff)
J Knackstredt and M Connor (Defendant)

  Solicitors:
Gilbert + Tobin (Plaintiff)
Clyde & Co (Defendant)

File Number(s):

2018/00117085

Publication restriction:

Nil

INDEX

JUDGMENT – WARD CJ in Eq					[1]
Background					[14]
The parties				[14]
Relevant persons				[21]
Stahlgruber AG			[22]
Rema Tip Top AG			[23]
DBS			[27]
Rema Tip Top			[30]
Rema Tip Top Australia			[38]
Rema Tip Top SA			[41]
Mr Grüterich’s employment history within the Rema Group				[42]
DBS contract 25 October 2012			[42]
First SA Contract commencing 1 June 2013			[50]
Second SA Contract dated 30 May 2014			[54]
Education Support Letter dated 8 September 2014			[57]
Mr Grüterich’s deployment to Australia			[59]
25 November 2015 email from Mr Wach and the document attached to Mr Wach’s letter of offer (dated 24 November 2015)			[62]
DBS Posting Agreement dated 8 December 2015			[67]
January 2016 – discussions re Australian employment contract			[75]
Mr Grüterich’s appointment as Chief Financial Officer of Rema Tip Top			[82]
Appointment of Mr Grüterich as managing director of Rema Tip Top			[84]
Discussions as to Mr Grüterich’s contractual arrangements in the period from August 2016 through to February 2017			[85]
15 November 2016 draft employment contract prepared by Mr Taylor for Mr Grüterich			[87]
11 December 2016			[91]
22 January 2017 €50,000 Bonus Letter			[106]
Early February 2017 communications re Australian employment contract			[113]
13 February 2017 emails			[117]
14 February 2017			[121]
14 February 2017 Employment Contract			[139]
Termination of DBS contract			[145]
17 February 2017 – Car Allowance direction			[148]
18 February 2017 email			[150]
2017 Education Support letter			[151]
Communications re bonus			[153]
Payment of €30,000 bonus			[157]
June 2017 – “outstanding bonus agreement”			[158]
Position as at August 2017			[159]
22 September 2017 email to Mr Zimmer			[163]
12 December 2017 regional meeting			[165]
12 December 2017 Double Salary Direction			[178]
Late December 2017 query by Mr Grüterich as to confirmation of his “private topic”			[187]
Salary Progress Document			[190]
Termination of the employment contract			[206]
Events after termination notice			[219]
These proceedings				[223]
Issues			[225]
Evidence			[237]
Mr Grüterich				[242]
Mr Kopp				[259]
Mr Zimmer				[262]
Mr Labbé				[264]
Mr Slattery				[267]
Jones v Dunkel inferences				[270]
Issues for Determination					[288]
Mr Grüterich’s employment arrangements				[289]
Express terms of the 14 February 2017 Employment Contract			[290]
Implied term			[291]
Oral variation			[293]
Was there a fixed term?				[297]
Rema Tip Top’s submissions			[300]
Mr Grüterich’s submissions			[309]
Determination			[311]
Alleged unauthorised payments/appropriations				[339]
Car allowance			[341]
Rema Tip Top’s submissions regarding the car allowance		[352]
Mr Grüterich’s submissions regarding the car allowance		[361]
Evidence as to authority matrices		[365]
•   Mr Grüterich’s submissions as to matrices	[372]
•   Determination as to admissibility of the evidence of the delegations of authority	[378]
Determination as to car allowance having regard to the above		[382]
Double salary payments			[391]
Rema Tip Top’s submissions regarding the double salary payments		[394]
Mr Grüterich’s submissions regarding the double salary payments		[412]
Determination as to the double salary payments		[413]
Bonus payment ($103,210.88)			[417]
Rema Tip Top’s submissions regarding the bonus payment		[423]
Mr Grüterich’s submissions regarding the bonus payment		[449]
Determination		[457]
•   The March 2018 spreadsheet	[457]
•   Conclusion on this issue	[471]
Furniture purchase			[475]
Rema Tip Top’s submissions regarding the furniture purchase		[476]
Mr Grüterich’s submissions regarding furniture purchase		[489]
Determination		[492]
Travel expenses			[493]
Mr Grüterich’s submissions regarding travel expenses		[494]
Rema Tip Top’s submissions regarding travel expenses		[503]
Determination		[517]
Credit card expenses			[520]
Emirates flights costs (Annexure B)		[536]
Boston and New York travel (Annexure C)		[537]
Mew Zealand travel (Annexure D)		[540]
Miscellaneous expenses (Annexure G)		[543]
Rema Tip Top’s submissions regarding the credit card expenses		[544]
Mr Grüterich’s submissions regarding the credit card expenses		[546]
Determination		[547]
Was Rema Tip Top entitled to terminate as at 16 March 2018 for serious misconduct?				[553]
Rema Tip Top’s submissions			[554]
Determination			[563]
Restitutionary claim for recovery of notice payment				[579]
Mr Grüterich’s submissions			[600]
Determination			[615]
Misleading or deceptive conduct claim				[644]
Rema Tip Top’s submissions			[645]
Mr Grüterich’s submissions			[655]
Determination			[659]
Trust claim				[668]
Determination			[673]
Overpayment of annual leave on termination				[674]
Cross-claim				[675]
Determination			[682]
Costs					[689]
Orders					[690]

Judgment

1. HER HONOUR: This matter involves a dispute between Rema Tip Top Asia Pacific Pty Ltd (Rema Tip Top) and its former managing director, Mr Christian Grüterich, relating to Mr Grüterich’s employment with Rema Tip Top and the circumstances in which that employment came to an end.

2. There is an issue as to whether Mr Grüterich’s contract of employment was validly terminated by Rema Tip Top by notice on 16 March 2018 or whether it was terminated on 23 April 2018 when Mr Grüterich’s then solicitors advised Rema Tip Top’s solicitors that Mr Grüterich accepted what was contended to be Rema Tip Top’s repudiation of his contract of employment. However, on either case, it is accepted that the employment relationship between Mr Grüterich and Rema Tip Top came to an end on 16 March 2018. Shortly thereafter, Rema Tip Top paid Mr Grüterich a termination payment, which was based on Mr Grüterich’s calculation of his entitlements, and included a component of $213,655 (the Notice Payment) for six month’s salary in lieu of notice. Mr Grüterich contends that his employment contract was for a fixed term and not terminable (other than for cause) before 31 December 2019 – hence his claim that Rema Tip Top repudiated his contract of employment by giving him notice on 16 March 2018.

3. Rema Tip Top denies that the contract of employment was for a fixed term but says that, in any event, it was entitled summarily to terminate Mr Grüterich’s contract for serious misconduct by Mr Grüterich during the course of his employment. Rema Tip Top alleges that Mr Grüterich: wilfully and dishonestly misappropriated moneys from Rema Tip Top; purchased personal property without its authorisation; and breached his fiduciary duty to Rema Tip Top while in its employment. Apart from some relatively minor purchases of personal items on his company credit card, Mr Grüterich broadly denies the allegations of misconduct that have been made against him and asserts that particular payments to him (for items such as an annual car allowance, private travel and home furniture) were within the scope of his authority as managing director or otherwise authorised.

4. Rema Tip Top seeks: a declaration that it was justified in terminating Mr Grüterich’s contract of employment in March 2018 for serious misconduct by Mr Grüterich (prayer 1); declarations that moneys wilfully and dishonestly misappropriated by Mr Grüterich from Rema Tip Top (totalling $195,960.87 prior to tax) and personal property purchased by Mr Grüterich using Rema Tip Top’s moneys without its authorisation, were impressed with a presumed or resulting trust, and are held on trust by Mr Grüterich for the benefit of Rema Tip Top (prayers 2A-2B); and, in the alternative, a declaration that Mr Grüterich caused to be paid to himself the sum of $195,960.87 (prior to tax) and property purchased by Mr Grüterich using Rema Tip Top’s moneys, in breach of his fiduciary duty not to make an unauthorised profit from his position, and that such moneys and property are held by Mr Grüterich subject to a constructive trust in Rema Tip Top’s favour (prayer 2C).

1. Rema Tip Top also seeks damages (prayer 2); equitable compensation generally and/or under s 1317 of the Corporations Act 2001 (Cth) (Corporations Act) (prayers 3-4); restitution (prayer 5); in the alternative, damages under s 236 of the Competition and Consumer Act 2010 (Cth), Sch 2 – Australian Consumer Law (Australian Consumer Law) (prayer 5A); interest up to judgment (prayer 6); and costs and interest on costs (prayers 7-8).

2. Although Mr Grüterich disputes that this is a case of fraud, arguing that instead it is about technical questions surrounding the nature and scope of [his] employment contract, including the effect of an entire agreement clause, given that serious allegations involving dishonesty are here made against Mr Grüterich, it is accepted by Rema Tip Top that it bears the onus of proof to the Briginshaw standard (Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34 – Briginshaw v Briginshaw) of those allegations.

3. Mr Grüterich filed an amended cross-claim on 15 April 2019 (the cross-claim) (pursuant to leave to amend granted by Kunc J on 12 April 2019) seeking: damages for breach of contract (prayer 1); judgment for a contractual debt of $1,432,722.85 (plus the payment of PAYG and fringe benefits taxes as required) (prayer 2); declarations that Rema Tip Top engaged in misleading conduct in relation to Mr Grüterich’s employment, contrary to ss 18 and 31 of the Australian Consumer Law (prayers 3-4); damages pursuant to s 236 of the Australian Consumer Law (prayer 5); payment of accrued long service leave pursuant to s 4 (though I note that the cross-claim says s 5 which I assume is an incorrect reference) of the Long Service Leave Act 1955 (NSW) (Long Service Leave Act) (prayer 6); and costs and interest on costs (prayers 8-9).

4. For the reasons that follow, I have concluded that Mr Grüterich’s contract of employment was not (as he contends) for a fixed term; rather, that it was terminable on six months’ notice without cause; and that it was validly terminated by Rema Tip Top on 16 March 2018. In that regard, I am not persuaded that Mr Grüterich’s misleading or deceptive conduct claim as to representations alleged to have been made to him in the course of his employment (in relation to a fixed term or otherwise) has been made good.

5. I further find that Rema Tip Top would have been justified in summarily terminating Mr Grüterich’s contract of employment on 16 March 2018 for serious misconduct; that misconduct being comprised of: Mr Grüterich’s unauthorised directions for payment to himself of an annual car allowance, double salary payments and amounts said to be referable to a private business class travel budget (which I cannot find were honestly made) together with the overall history of unauthorised use of his company credit card for personal expenditure (some of which non-work-related expenses is now not disputed by him); those amounts in Mr Grüterich’s hands being impressed with a resulting or presumed trust. I find that the direction for a payment of a sum being the equivalent of a €50,000 bonus for the 2017 year (the bonus payment) was also not authorised but I am not satisfied that Mr Grüterich’s conduct in relation to that payment was dishonest; this sum being recoverable by way of restitution, having been paid by Rema Tip Top under the mistaken belief that it was obliged to make that payment and in circumstances where the retention of that benefit by Mr Grüterich would be unjust. (Pausing here, I note that Mr Grüterich’s change of position defence related to the Notice Payment claim not the bonus payment claim.)

6. The consequences of those findings, in terms of the relief here sought by Rema Top, are dealt with in due course.

7. I accept that, at the time of its termination of Mr Grüterich’s employment, Rema Tip Top was under the mistaken belief that it was entitled so to do only on the provision of notice (with payment of six months’ salary in lieu of a notice period if it so chose), rather than (as I have found it was) summarily for cause. However, I am not persuaded that Rema Tip Top’s claim for restitution or misleading or deceptive conduct in relation to the Notice Payment is made good.

8. Finally, as to Mr Grüterich’s cross-claim to payment of long service leave, I find that this claim is made good because, although Rema Tip Top was entitled summarily to terminate his employment for serious misconduct in March 2018, in fact it did not do so.

9. For the sake of clarity, I note here at the outset that any reference to an amount in dollars in this judgment (as opposed to euros) is a reference to Australian dollars (unless otherwise stated).

Background

The parties

14. Rema Tip Top is a company incorporated in New South Wales under the Corporations Act. It is a subsidiary of Rema Tip Top AG, which is based in Germany. Rema Tip Top AG is the Asia-Pacific holding company for a large number of subsidiaries that operate in Australia and the Asia-Pacific region as part of the Rema Group of companies, including Rema Tip Top (see T 60). The ultimate holding company of the Rema Group is a German company, Stahlgruber Otto Gruber AG (Stahlgruber AG). An entity referred to in the course of cross-examination of Mr Udo Zimmer (the current chief executive officer and chief financial officer of Rema Tip Top AG) as OWGAG is (to Mr Zimmer’s understanding) the sole shareholder of Stahlgruber AG (see T 61.46).

15. Rema Tip Top has, as noted, a number of subsidiaries. Those subsidiaries relevantly include: Rema Tip Top Australia Pty Ltd (Rema Tip Top Australia), Rema Tip Top South Africa Pty Ltd (Rema Tip Top SA), and ConvaTech Holdings Pty Ltd (ConvaTech) (the last being a company that was acquired by Rema Tip Top in about 2016).

16. Another company in the Rema Group, dbs Delta Business Services GmbH (DBS), a company also based in Germany, is a shared service company which provides services to companies in the Rema Group, including human resources services. It is a wholly owned subsidiary of either Stahlgruber AG or OWGAG (see T 62).

17. Rema Tip Top is part of a global manufacturing business headquartered in Poing, Germany, that produces a range of goods with industrial (and other) applications including tyres, conveyor systems, valves and weights.

18. In terms of its internal corporate structure, Rema Tip Top’s parent company (Rema Tip Top AG) has both a Board of Directors and a separate Supervisory Board that oversees the Board of Directors (the latter being a feature, as I understand it, of German corporate governance). There is also reference in some of the documents to an Advisory Board. There was some exploration during the course of cross-examination of some of Rema Tip Top’s witnesses as to the precise role played by the Supervisory Board of Rema Tip Top AG and the Board of Directors of Rema Tip Top AG (or, for that matter, the Local Board of Directors of Rema Tip Top) (see, for example T 88 and T 199). Suffice it here to note that the relevant distinction in terms of the corporate governance of companies within the Rema Group (whether as a function of German law or not) seems to be that certain decisions are required to be approved at the Supervisory Board level (including the setting of the local company’s investment (or capital expenditure) budgets from time to time).

19. So, for example, Mr Slattery (a director of Rema Tip Top from 2016 to 2019), gave evidence that the Local Board obtained its instructions from the German parent company (Rema Tip Top AG); that matters such as executive salaries and other employment benefits were set by the German parent; and that (as a director) he had no role in approving or not approving company expenses (or, for that matter, any expenditure by Mr Grüterich, who was his superior) (T 200).

20. Within the Rema Group, the understanding of various of those involved in the management of one or more of the companies seems to have been that the ultimate decision maker is a Mr Heinz Reiff (about whom I will say more below). Nevertheless, it is apparent (if nothing else than by reference to Mr Grüterich’s own conduct), that directions made by Mr Reiff will not necessarily always be followed.

Relevant persons

21. Before turning to Mr Grüterich’s employment history within the Rema Group, it is convenient briefly to set out (albeit without purporting to be exhaustive) a description of the dramatis personnae, namely the relevant directors and employees of the respective Rema Group entities involved in the events the subject of these proceedings (not all of whom gave evidence in the proceedings – a matter about which there was no little complaint by Mr Grüterich, to which I will return in due course).

Stahlgruber AG

22. Mr Heinz Reiff, to whom I have referred above, is the Chief Executive Officer of Stahlgruber AG, the ultimate holding company of the Rema Group, and the Chairman of the Supervisory Board of Rema Tip Top AG.

Rema Tip Top AG

23. Mr Thorsten Wach was a director of Rema Tip Top at the time Mr Grüterich commenced employment in Australia in early 2016 and until 13 October 2017. He became the Chairman of the Board of Rema Tip Top AG and its Chief Executive Officer in around August 2016 and held that position until late August 2017. The evidence that emerged in cross-examination of Mr Michael Labbé was that Mr Wach’s employment was suspended in about August 2017 and that there is an ongoing dispute (not resolved or disposed of at least at the time of the hearing before me) between Mr Wach and Rema Tip Top AG as to the termination of his employment.

24. Mr Patric Scheungraber was a member of the Board of Rema Tip Top AG (at least as at December 2016).

25. Mr Michael Labbé is a member of the Board of Rema Tip Top AG and its Chief Business Development Officer.

26. Mr Udo Zimmer was a director and member of the Board of Rema Tip Top AG as at December 2016, and its Chief Financial Officer from March 2016 until January 2018, when he replaced Mr Wach as Global Chief Executive Officer of Rema Tip Top AG.

DBS

27. Mr Werner Heumüller is the Managing Director of DBS, who signed the 25 October 2012 “side-letter” for DBS in relation to Mr Grüterich’s initial deployment by DBS to South Africa (see further below).

28. Mr Thorsten Kopp is employed by DBS in its Human Resources department as the Head of Human Resources.

29. Mr Michael Ubelacker is the Legal Counsel of Stahlgruber AG and the Managing Director of DBS.

Rema Tip Top

30. Mr Peter Wieczorkowski was the Chief Financial Officer, and the person to whom Mr Grüterich reported in Rema Tip Top when Mr Grüterich commenced work in Australia in 2016. In June 2016, Mr Grüterich took over the position of Chief Financial Officer from Mr Wieczorkowski. (In cross-examination, Mr Grüterich was taken to documents that reveal that, in the period leading up to Mr Wieczorkowski ceasing to hold the position of Chief Financial Officer, Mr Grüterich had sought any evidence of misconduct by Mr Wieczorkowski; which suggests that Mr Wieczorkowski’s cessation in the role of Chief Financial Officer may not have been wholly amicable.)

31. Mr Alan Malsem (formerly with ConvaTech) became a director of Rema Tip Top, reporting to Mr Grüterich, in June 2016 after Rema Tip Top’s acquisition of ConvaTech. In August 2016, when Mr Grüterich became the Chief Executive Officer of Rema Tip Top, Mr Malsem became its Chief Financial Officer. Mr Malsem left employment with Rema Tip Top on about 17 February 2017, the year before Mr Grüterich (and apparently, as emerged in Mr Grüterich’s cross-examination, he also left not on good terms with Rema Tip Top).

32. Mr Peter Slattery (formerly with ConvaTech) was, from 12 May 2016 up until approximately two months before the hearing, a director of Rema Tip Top (and a member of the Advisory Board of the company).

33. Mr Lee van der Burgt is Rema Tip Top’s People & Culture Manager – Asia Pacific.

34. Mr Lauren Davison is the Group Financial Controller and Company Secretary of Rema Tip Top.

35. Ms Jacqueline Fairclough is the Payroll Manager for Rema Tip Top and has held this position since 29 January 2017.

36. Ms Sherry Lin was employed as a financial accountant with Rema Tip Top for a 13 months period ending in November 2017.

37. Ms Natasha Thompson is employed by Rema Tip Top as an executive assistant and, from about late August 2017, she was appointed as executive assistant to Mr Grüterich.

Rema Tip Top Australia

38. Mr Craig Philpotts was a managing director from November 2017 of Rema Tip Top Australia.

39. Mr Robert William Cross is the State Manager (NSW) of Rema Tip Top Australia.

40. Mr Mike Taylor is the Group Manager, People, Culture & Safety of Rema Tip Top Australia.

Rema Tip Top SA

41. Mr Stefan Flohr was at the relevant time the Managing Director of Rema Tip Top SA.

Mr Grüterich’s employment history within the Rema Group

DBS contract 25 October 2012

42. Mr Grüterich began his employment within the Rema Group when he entered into an employment contract with DBS on 25 October 2012 (the DBS employment contract). The contract was in German (a translation of it, and of other German language documents, was in evidence and there was no real dispute as to the accuracy of the translations although, in some instances, there were competing translations).

43. Clause 1 of the DBS employment contract provided that:

(1)   The employee is recruited as a project manager in the area of International CO/Revision. A detailed job description will be provided later.

(2)   The work relationship begins on the 01/12/2012.

…

(5)   Place of work: project-related; initially at least 12 months in South Africa.

44. Under the terms of the DBS employment contract, Mr Grüterich was deployed for “project-related work” (in effect, seconded) to South Africa commencing on 1 December 2012.

45. Pursuant to cl 4 of the DBS employment contract, Mr Grüterich’s remuneration was specified as the gross amount of €5,835.00 per month. Clause 5 provided that any payment of bonuses by the company was voluntary, revocable at any time, and “does not establish any future legal claims”. Clause 11, headed “[e]nding of the work relationship”, provided that:

Legal provisions apply. After the familiarization period in Warstein or Poing and with the beginning of the deployment overseas in South Africa a resignation notice of 3 months up to the month’s end is required.

46. Clause 13, headed ‘[f]inal clause’, provided that:

Oral ancillary agreements do not exist. Additions and alternations [sic; presumably an error in transcription; scil alterations] as well as the cancellation of this contract are required to be in written form. This applies also to alteration of the written form requirement.

47. The DBS employment contract was prefaced by a “[p]reliminary note” stating that “[t]he Side-Letter included in the attachment is a component of this employment contract”.

48. That “Side-letter”, also dated 25 October 2012, contained (relevantly) the following:

From the 01/12/2012 you are employed with dbs as a project manager in the area of International Controlling/Revision. After a familiarization period (dbs Warstein/CP Poing) you will initially be employed in South Africa.

As intimated already in the conversations conducted, an agreed-upon employment contract with OWG Management AG, Zurich supersedes as quickly as possible the employment contact existing with dbs. In relation to this there are still some legal framework conditions that must be clarified.

In the case of sojourns in foreign countries we arrange for you and your life-partner a full foreign country health insurance. Further, at the foreign place you are assigned to, a typical local company car (Polo Class) is placed at your disposal. [I note, here, the use of the singular - “a” company car]

The company supports you in the search for accommodation in the country of employment. You will receive monthly a supplement for monthly rent to the amount of €750.00 gross. Further, you receive a removal costs allowance to the amount of €2,000.00.

For the period of the project in South Africa the company reimburses the costs of at least two flights home to the FRG per year (Economy Class).

After the conclusion of the project in South Africa and return to Germany or Switzerland, the remuneration incorporated in the employment contract is adjusted in accordance with the future site of work. The remuneration currently agreed to in the contract refers to assignment in South Africa and the associated cost of living.

49. What this seems to have contemplated was that there would be an employment contract entered into with another entity (OWG Management AG, Zurich) that would supersede the DBS employment contract but that, until that time, the DBS employment contract governed Mr Grüterich’s “project-related” deployment to South Africa.

First SA Contract commencing 1 June 2013

50. Mr Grüterich subsequently entered into a “Fixed Term Contract of Employment” with Rema Tip Top SA (the First SA Contract) (presumably, this being the contract that had been contemplated in the side-letter referred to above). That contract, the date of which is hard to discern from the copy of the document in evidence, specifies the period of employment as commencing on 1 June 2013 and describes Mr Grüterich’s position as that of “Controller”.

51. The First SA Contract provided that Mr Grüterich was to report directly to the Head of Treasury and Financial Controller (cl 1.4); that he was to be allocated a “Company vehicle” (cl 4.1) (note, again, the use of the singular); that bonuses paid by the company “are a privilege and not a right” (cl 6.1); that the “Management reserves the right to set the bonus criteria and evaluate the qualification” (cl 6.1) and that all commissions are forfeited on resignation and termination of employment ( cl 6.2). Although headed a “fixed term” contract, and although the termination of employment clause contained therein makes reference to the contract being a fixed term (see cl 19.1), it is difficult to see any fixed term specified in the First SA Contract. The First SA Contract also contained a clause providing, in effect, that no changes to the agreement would be effective unless reduced to writing and signed by both parties (see cl 26.1).

52. Clause 18 dealt with the company’s policies, noting that the company “has an extensive set of policies and procedures which are available on request” and that Mr Grüterich was “expected to familiarise [himself] with those policies and procedures that may affect [him]” (cl 18.1); and requiring Mr Grüterich to comply with the policies and procedures while in the employment of the company (cl 18.2)

53. Appendix 1 to the First SA Contract, signed by Mr Wach as “CEO”, specified an agreed remuneration package: a fixed salary of R23,500.00 per month; “company car”; and that the company “will pay for reasonable rented accommodation”.

Second SA Contract dated 30 May 2014

54. A second contract of employment, dated 30 May 2014, was entered into by Mr Grüterich with Rema Tip Top SA (the Second SA Contract). In this contract, Mr Grüterich’s position is identified as “Head of Business Analysis”; the starting date of employment is 1 June 2014; there were similar provisions for allocation of a company vehicle and for bonuses; the termination provision is the same; and there is the same cl 26.1 relating to changes to the agreement.

55. Appendix 1 to the Second SA Contract, again signed by Mr Wach as “CEO”, specified an agreed remuneration package: a fixed salary of R48,600.00 per month; “company car”; and that the company “will pay for reasonable rented accommodation”.

56. While the Second SA Contract is accepted as having superseded the First SA Contract, it is not clear what the status of the initial DBS employment contract was after the entry into and during the subsistence of the respective SA Contracts. It seems to have been understood that the DBS contractual arrangement continued in operation at the same time as each of the respective SA Contracts. That this is the case seems to be consistent with the correspondence from DBS to Mr Grüterich in September 2014 (see below) in which DBS notified, among other things, an increase in salary (at a time when Mr Grüterich was working in South Africa under the Second SA Contract).

Education Support Letter dated 8 September 2014

57. By letter dated 8 September 2014, headed “Salary/Further Education”, DBS advised Mr Grüterich that:

We are happy to inform you that we are raising your agreed-upon, annual, gross salary with effect from the 01/09/2014 to an amount of €95,000.00 gross.

Further, we would like to financially support you in your further education (Doctor of Business Administration) and pledge to you here an amount of €10,000.00 per year for the period of three years.

58. Relevantly, the pledge of support for Mr Grüterich’s further education was not, in terms, framed as some kind of discretionary payment “at large”. It was expressed as financial support “in your further education” and referred to a particular degree course. It can only reasonably have been understood as being limited for use for those stated purposes.

Mr Grüterich’s deployment to Australia

59. Towards the end of 2015, it was proposed that Mr Grüterich be deployed to work in Australia. By email sent on 23 November 2015, with the email subject heading “Contract documents”, Mr Kopp (Head of Human Resources at DBS) informed Mr Grüterich that:

I have coordinated with Thorsten [presumably, Mr Wach] your deployment and have attached the relevant deployment contract created as a draft. Additionally, I have recorded the adjustment of the income in a corresponding letter.

60. It is not clear what was attached to that 23 November 2015 email. There was, however, in evidence a letter dated 24 November 2015 signed by Mr Wach as CEO of Rema Tip Top Australia, offering Mr Grüterich employment with Rema Tip Top Australia and attaching a contract. The attachment to the 23 November 2015 email may therefore have been a draft version of that document.

61. By email sent on 24 November 2015 to Mr Wach, Mr Grüterich forwarded to Mr Wach the “contract documents” email he had received from Mr Kopp and requested confirmation from “Mr Wach’s side” as follows:

As discussed, I do not need the inclusion of points in the contract, just want you to be aware of this.

-   Payment of journey home/container costs

-    4 flights home for Denise [Mr Grüterich’s then partner] and I per annum

-   Long haul business flights in Business Class

-    € 120,000.00 as agreed instead of €115,000 according to attachment (not crucial, can be added in Australia)

-   $150,000 AUD gross/per annum in Australia (€64,000.000 [sic] net as discussed)

-   Duration of contract 5 years?

-   Job description in Australian and reporting to whom?

-   Payment of housing and company car

-   Bonus.

25 November 2015 email from Mr Wach and the document attached to Mr Wach’s letter of offer (dated 24 November 2015)

62. Mr Wach’s response to the above request, by email on 25 November 2015 at 11.23am, (on which, among other things, Mr Grüterich relies in support of his defence of Rema Tip Top’s present claim relating to the car allowance payments ) was, relevantly:

It’s all still a bit confusing. I don’t like any net agreements; we also didn’t discuss anything net.

The private travel expenses are very high.

Income Germany    €120,000.00 Euro Gross    [As I understand it this is the DBS component of his salary]

Income Australia   €60,000.00 Euro Gross

(Remark: Exchange rate fluctuations versus AUD $$ cannot be retrospectively implemented 2 x each year)

Private travel budget    $10,000 AUD

Remark: (Booking is available via company)

Removal expenses to/from Sydney are covered by the company.

Business travel (without attachment) for 9 hours in Business ok.

Company car according to local standard ok

No extra housing (is included in the AUS package)

No additional bonus agreements in the contract

Duration of contract minimum 3 to 5 years, but can also be open ended

Location: Sydney, Reporting to the Group Financial Director

Arrangements for a transition period can vary.

Job description and Australian contract are done locally.

Additional non-monetary contributions that are currently still running via DBS will not be changed.

Hope that this clarifies everything. I will also inform Thorsten Kopp accordingly.

63. Pausing here, it is apparent from this communication that, among other things, Mr Wach was not agreeing to a “net” agreement in respect of Mr Grüterich’s salary; that he considered the private travel expenses “very high” and instead was putting forward a “private travel budget” of $10,000; and that he was indicating his agreement (although not being specific as to the relevant time period) to the duration of the contract being a “minimum” of three to five years (and the statement “can also be open ended” leaves open the prospect that the employment contract would not be fixed).

64. The document attached to Mr Wach’s letter of offer (dated 24 November 2015) described Mr Grüterich’s position with Rema Tip Top Australia as “Group Financial Controller/Business Intelligence” and his location at the Chullora office. The document stated that Mr Grüterich was reporting to Mr Peter Wieczorkowski; that his employment was permanent full time, with a base salary of $100,000.00 per annum (plus statutory superannuation payments); and that in this role he would be entitled to “a fully maintained vehicle governed by the company’s motor vehicle policy”. The commencement date was stated to be “TBA” (presumably, “to be advised”).

65. The general conditions of employment in that document included a statement as to Mr Grüterich’s obligations as employee; and stated that his base salary would be reviewed on an annual basis in June each year; and that salary increases were at Rema Tip Top Australia’s discretion. The provisions dealing with termination included (cl 18.1) dismissal immediately and without notice “in the event of serious misconduct or wilful breach of employment conditions” and (cl 18.2), for termination on notice. Clause 21.1 contained a “whole agreement” clause and cl 21.2 provided that the agreement may only be varied by written agreement. There was nothing in the document specifying a fixed contractual term (or any defined period of employment, in contrast with the December 2015 DBS arrangements).

66. Although not signed, it does not seem to be disputed that this document sets out the parties’ understanding of what were the then proposed arrangements vis a vis Mr Grüterich’s employment with Rema Tip Top Australia (though I note that Mr Grüterich also places weight on the 25 November 2015 email in this regard).

DBS Posting Agreement dated 8 December 2015

67. By letter dated 8 December 2015, Mr Heumüller wrote to Mr Grüterich (on DBS letterhead) informing him that “we will increase the annual gross salary agreed on with you as from 01/01/2016 to an amount of €120,000.00 gross”.

68. A “Posting Agreement” of that date between DBS and Mr Grüterich then provided an agreed “supplement to the employment contract”. The preamble to that document stated:

Agreement exists between the parties that the employee will for the time being be assigned as a project manager from the 01/01/2016, or earlier, in Sydney.

69. The Posting Agreement provided that the employee (i.e., Mr Grüterich) is posted to Sydney for a fixed time (cl 2.1) and that the Posting Agreement ends with the expiry of the time limit (31/12/2020), without requiring any further explanation by the employer (but also contemplated that, in case it is necessary, the posting may be extended for a further limited period). Clause 2.2 reserved the employer’s right to end the assignment abroad at any time “for objective reasons with a period of notice of 4 weeks, ending prematurely on the fifteenth or the end of a calendar month”.

70. Clause 2.6 provided that after the conclusion to the posting “the present posting agreement lapses, so that the previous work conditions according to the employment contract as well as their additions again become active”. (Presumably, this was a reference to the initial DBS employment contract and it was contemplated that this would then in some fashion revive at that stage.)

71. Clause 7 dealt with expenses and allowances, providing that allowances and necessary expenses of the employee “are reimbursed during the posting abroad on the basis of the current valid travel costs guidelines” and that the employer was entitled to alter the firm’s travel costs guidelines for objective reasons “in particular where changes and legal conditions occur”. Clause 8 provided that the employee will pay taxes on his payments in accordance with the relevant national and international regulations “as his own responsibility and independently”.

72. The Posting Agreement provided that the work relationship, its conclusion and the post-contractual obligations of both parties are determined by German law and that the parties agreed on the exclusive jurisdiction of the relevant labour court for the location of the employer (cl 11).

73. Clause 12 again contained a requirement that alterations and the like were required to be in written form for their legal efficacy and excluding oral ancillary agreements.

74. The Posting Agreement appears to have been signed by Mr Grüterich on 8 December 2015.

January 2016 – discussions re Australian employment contract

75. On 7 January 2016, Mr Grüterich sent an email to Mr Wach, referring to a discussion on the telephone in November (presumably, 2015) and saying:

As already discussed on the phone in November, please forward to me the Australian employment contract. At the time you intended to find out what would be possible in Australia.

I have now researched and discussed with Peter [presumably, Wieczorkowski] the local housing expenses which are approx. $50,000.00 AUD/annually for a decent, unfurnished two-room apartment outside of Sydney.

As discussed, this would almost use up the entire abroad budget. [It is not clear to what “entire abroad budget” Mr Grüterich is here referring.]

Therefore, please make a favourable adjustment/provide a favourable solution.

Peter was of the opinion this morning that I do not have a contract and/or details.

76. Mr Wach responded on 8 January 2016 “[y]es, I will also sponsor you something, as discussed” and stated that he was under the impression “that you have already received a contract about the visa application” and would look into it. Mr Grüterich’s response was that something had been forwarded to him about the visa application “but not what he had discussed, some important things” and that “her” (Taniya) and Peter were of the opinion that he, Mr Grüterich, should sign it this time “but only for the purpose of the visa application and the rest would come after our discussions”. Mr Wach responded to that on 10 January 2016 “[t]hat is correct. The numbers will need to be adjusted as per the recent conversations.” “We’ll do it”.

77. The reference to a “contract about the visa application” in Mr Wach’s 8 January 2016 email presumably related to the need to sign some kind of contractual document in connection with a visa application for Mr Grüterich to work in Australia, but nothing turns on this. What is, however, clear from this correspondence is that Mr Grüterich understood at that stage (i.e., 7 January 2016) that there was not yet any concluded employment contract in relation to his employment in Australia.

78. Mr Grüterich has deposed in his 25 July 2018 affidavit (at [89]) that on 11 January 2016 he commenced his employment with Rema Tip Top Australia. Presumably, that is the date he says marked the actual commencement of his employment in Australia (though the Posting Agreement provided for a 1 January 2016 commencement). At that stage, there does not yet appear to have been any signed employment agreement with Rema Tip Top Australia.

79. As noted above, cl 2 of the Posting Agreement provided for a fixed term of employment ending on 31 December 2020. However, there was no fixed term specified in the document sent to Mr Grüterich in relation to his Rema Tip Top Australia employment contract.

80. It is not disputed that Mr Grüterich’s remuneration under the respective employment arrangements included both an amount in euros paid to him in Germany by DBS and an amount in Australian dollars paid to him in Australia.

81. Further, from about February 2016, Mr Grüterich had the use of a company credit card (HSBC Credit Card) issued in Mr Grüterich’s name. (Mr Grüterich claims that in August 2016, Mr Wach told him that Mr Wach did not need to review Mr Grüterich’s company credit card statements. Rema Tip Top argues that that is implausible. In any event, from August 2016 until Mr Grüterich’s employment was terminated on 16 March 2018, Mr Grüterich did not at any time submit his HSBC Credit Card statements for approval by Mr Wach or any other superior (moreover, on his own evidence he gave only a cursory review of those statements when authorising reimbursement of credit and expenses and it appears that he gave his assistant, Ms Thompson, carte blanche to be “creative” when reconciling expenses on his corporate credit card statements – see below).)

Mr Grüterich’s appointment as Chief Financial Officer of Rema Tip Top

82. On 24 June 2016, Mr Grüterich (as Chief Financial Officer of Rema Tip Top) issued a company announcement to all staff that, following the successful merger between Rema Tip Top and ConvaTech in May, effective from 1 July 2016 he (Mr Grüterich) and Mr Malsem would take over directorship from Mr Wach and Mr Wieczorkowski. The announcement referred to Mr Wach having “previously” become the new Chairman of the Board of Rema Tip Top AG in Germany and “therewith responsible for all of the Rema businesses worldwide”. The announcement stated that Mr Grüterich had been appointed as the new Chief Financial Officer for Rema Tip Top taking on the responsibilities from Mr Wieczorkowski and that Mr Wieczorkowski would provide support to Mr Grüterich to ensure a smooth transition and would report to Mr Grüterich during this period. (Inconsistently with this, in cross-examination Mr Grüterich’s evidence seemed to be that he was still reporting to Mr Wieczorkowski at this time – the relevance of this being as to the reliance that Mr Grüterich could place on any authority allegedly obtained from Mr Wieczorkowski as to his entitlements (see T 254).)

83. The June 2016 announcement stated that Mr Malsem was previously the General Manager for Support Services at ConvaTech and had been appointed as the new Chief Financial Officer for “Rema Tip Top Industry Holding Australia” and would also report to Mr Grüterich. The announcement stated that, following those changes, the ConvaTech Shared Services “will transition into the Rema Tip Top Asia Pacific business”.

Appointment of Mr Grüterich as managing director of Rema Tip Top

84. Subsequently, Mr Wach, as Chairman of the Board of Rema Tip Top AG, issued an announcement on 8 August 2016 that Mr Grüterich would take on the position as Managing Director, and Mr Malsem would take on the position as Finance Director, of Rema Tip Top.

Discussions as to Mr Grüterich’s contractual arrangements in the period from August 2016 through to February 2017

85. One feature of this case is that many of the discussions relied upon by Mr Grüterich as establishing (or amounting to representations as to) his contractual entitlements took place at what were referred to as “holding meetings” or “regional holding meetings” held at the Raffles Hotel in Singapore. It appears that these were regular meetings of the Rema Group executives across the Asia-Pacific region attended by executives from the headquarters of the Rema Group based in Germany. Another feature of the case is that Mr Grüterich was clearly pressing, from at least August 2016, for a new Australian employment contract to reflect his new role as Managing Director (and pressing subsequently for variations thereto). (That is relevant insofar as it belies the existence of any concluded agreement at the times when Mr Grüterich was agitating for just such an agreement.)

86. The first of those regional meetings on which Mr Grüterich here relies, was a discussion on 23 August 2016, at a regional “holding meeting” at the Raffles Hotel in Singapore, when Mr Grüterich says he requested that Mr Wach provide him with a contract for his new role as Managing Director. What then followed were various email communications in relation to the preparation of a new employment contract for Mr Grüterich.

15 November 2016 draft employment contract prepared by Mr Taylor for Mr Grüterich

87. It appears that Mr Grüterich asked Mr Taylor to prepare a draft contract for him (see the email sent on 15 November 2016 by Mr Taylor to Mr Grüterich apologising that he “did not meet [his] timeframe of completing this by yesterday” and stating that he had almost completed the draft contract and PD, but asking for details of his address “and who you report into [sic; to]”, as well as noting that other details had not been completed in relation to remuneration and whether or not he received a performance bonus). Mr Taylor apparently contemplated that the details not completed by him in the draft contract he had prepared for Mr Grüterich would be “filled in” by someone in Germany or else that he would be provided with this information to include it in the draft. Mr Taylor said in this email that once he had this information he could send Mr Grüterich back “the first draft of your contract”. In that email of 15 November 2016, sent at 5.25 pm, Mr Taylor said:

...I am wondering if you could confirm for me your address and who you report into [sic]? The other details that are not filled in relate to remuneration and whether or not you receive a Performance Bonus and if so the details relating to that, I am happy to leave this information blank to allow someone from Germany to complete or alternatively if someone provides this to me I can include it.

88. Mr Grüterich replied at 5.51 pm that day, “[j]ust send it through, I am going to get the rest filled”.

89. Mr Taylor then sent the draft contract to Mr Grüterich at 9.03 pm on 15 November 2016, saying:

… I have highlighted in yellow all of the parts that someone will need to complete.

90. Mr Grüterich’s evidence is that he had this draft prepared “so that I had a draft ready and available in December should Mr Wach not have his own draft contract available for review and signing”.

11 December 2016

91. Mr Grüterich says that in December 2016, at another regional holding meeting at the Raffles Hotel in Singapore, Mr Wach informed Mr Grüterich that Mr Michael Ubelacker (the Stahlgruber AG Legal Counsel and Managing Director of DBS), wanted Mr Grüterich to “transition” to an Australian employment contract only (i.e., presumably, for the existing DBS contract to be terminated – as ultimately occurred).

92. Mr Grüterich’s evidence is that on 12 December 2016 Mr Wach had told him that Mr Ubelacker would not be involved in the process of finalising his contract. However, Rema Tip Top points out that it is clear from the email correspondence that Mr Ubelacker was consulted about the terms of the Employment Contract and that Mr Kopp copied him (and Mr Wach) on emails to Mr Grüterich about the draft Employment Contract.

93. On 16 December 2016, Mr Grüterich sent the draft contract to Mr Kopp and Mr Wach. In his email to them (in German), Mr Grüterich said:

Hallo Thorsten,

I hope you are well. Haven’t heard any further for a long time.

As agreed with Thorsten Wach, I am attaching the draft employment agreement incl. position description,

With the request for coordination with Thorsten Wach and filling in the fields highlighted in yellow, for completion of the contract offer.

94. Pausing here, the significance of Mr Grüterich sending the draft to Mr Kopp at DBS is that DBS appears to have had the function (within the Rema Group) of attending to the preparation of relevant employment documentation not simply for DBS employees of other group companies.

95. The attached draft document (i.e., Mr Grüterich’s draft version as prepared by Mr Taylor) was styled as an “Executive Employment Agreement” bearing the date 24 June 2016 (the date of the announcement of Mr Grüterich as Chief Financial Officer of Rema Tip Top). The draft agreement recited that the company had decided to appoint a Chief Executive Officer to oversee the overall management of all the business within the Rema Tip Top Group within the Asia Pacific Region and had decided to offer to Mr Grüterich the position of Chief Executive Officer Asia Pacific.

94. The draft agreement provided for a permanent appointment commencing on 24 June 2016 and continuing until 31 June 2019 (i.e., a three year term) unless terminated by either party in accordance with cl 14 (see cl 2.1). The draft agreement also provided for automatic extension for another twelve months “starting the 1st July 2017” if none of the parties had “noticed” to the other party in writing that the relevant party is not willing to extend the employment. The draft agreement provided for the position to be a salaried position and that no other remuneration benefit overtime or allowances other than those to which the executive may be entitled under the agreement would be paid during the term of the agreement (cl 4.1).

95. Clause 14.1 of the draft agreement provided that, subject to cll 2 and 14.3, the executive’s employment had a fixed period of three years starting with the commencement date and terminating automatically on 31 June 2019. Clause 14.2 made provision for immediate termination without notice by the Chief Executive Officer of Rema Tip Top AG in certain events (including commission of any act of serious misconduct “which includes a material breach of the policies of the Rema Tip Top Asia Pacific Group”). The draft agreement contained an entire agreement clause (cl 17) and a written variation clause (cl 16). Its governing law was stated to be “the laws of the State of New South Wales and the Commonwealth of Australia”.

96. The remuneration package did not specify a salary amount or performance bonus but made provision for both to be inserted. It included as additional benefits, among other benefits, “[a]ccess to company car” and “use of corporate credit card”.

97. The draft agreement contains no provisions which purport to confer on Mr Grüterich a private travel allowance (or “budget”) of any kind. (Rema Tip Top submits that it is inconceivable that, having the opportunity to put this alleged entitlement into a written contract, Mr Grüterich would have failed to do so, had this been an agreed term having regard to its alleged value ($50,000 per annum).)

98. It is not apparent, from the documentary evidence, that Mr Wach had requested Mr Grüterich to arrange for the drafting of his own employment contract. In any event, as will be seen shortly, this draft was not accepted by Rema Tip Top.

99. Mr Kopp’s recollection is that he worked on Mr Grüterich’s employment contract in late January and early February 2017. Mr Kopp’s evidence is that he noticed that the draft contract was different to the “standard form” contract typically used for senior management employees, and that he did not look through it in detail because it was not a standard form contract. He says he mentioned this in a brief conversation with Mr Wach after he received the draft contract and that he discussed Mr Grüterich’s employment contract with Mr Ubelacker.

100. Mr Kopp’s evidence is that Mr Ubelacker was the person ultimately responsible for approving the legal framework and contractual clauses of Mr Grüterich’s employment contract, and that Mr Wach was responsible for providing him with instructions about the salary information and entitlements to be inserted into the contract.

101. Mr Kopp says that Mr Ubelacker instructed him that the employment contract was to be a “standard group contract, and no more”, prepared in the most up to date contract form. He says that he then prepared a revised version of the contract in standard form. Mr Kopp also deposes that he prepared a separate agreement between Mr Grüterich and DBS for the purpose of terminating “all existing agreements between DBS and Mr Grüterich. Mr Kopp says that he had a conversation with Mr Ubelacker regarding this agreement (and this was read as evidence of the conversation taking place but not for the truth of its contents (at [35])). At [57] of the affidavit, Mr Kopp also deposes that “Mr Grüterich was paid a bonus of €30,000 in 2016” (which I read as an assertion).

102. Mr Kopp also made reference to the Rema Group Human Resources Guideline policy, deposing that “[a]ll Managing Directors and Chief Executive Officers of Group companies have access to this policy (which I read as a statement of the witness’ understanding or belief) and that the policy had been distributed to “all Managing Directors of the different entities in the Group since the time it was introduced” (see at [80]-[81]). (The basis on which Mr Kopp said that the Human Resources Guideline was distributed was not explored further in his evidence in chief.)

103. On 20 January 2017, Mr Wach emailed Mr Kopp instructing him to send to Mr Grüterich the draft contract “we had prepared”.

22 January 2017 €50,000 Bonus Letter

106. Meanwhile, Mr Grüterich claims that, on 16 January 2017, Mr Wach said to him (inter alia):

I’ll pay you €30,000 for your 2016 performance, in addition to the €30,000 you got from Mr [Heinz] Reiff already for the Convatech acquisition, and I give you €50,000 for 2017 performance.

107. By email sent to Mr Grüterich on 23 January 2017, copied to Mr Wach, with the subject header “Contract matters”, Mr Kopp said:

I am sending you the draft information on the lump-sum payment in 2017.

There is an example in existence – GF Contract for the Australian companies in the Group. As soon as this is available to me, I will provide it to you with the relevant information and have the draft sent to you.

108. Attached to Mr Kopp’s email was an unsigned letter dated 22 January 2017 from DBS to Mr Grüterich. It appears that Mr Kopp prepared this letter at the request of Mr Wach (certainly, as noted above, it was copied to Mr Wach). It is also clear that Mr Grüterich understood this was no more than a draft, since in an email to Mr Wach sent on 23 January 2017 (see below) Mr Grüterich expressly refers to this letter as a ‘draft’.

109. The unsigned 22 January 2017 letter (on DBS letterhead) stated that in the year 2017 DBS would pay to Mr Grüterich a “special bonus to the amount of €50,000 gross”. It was said that this special payment was for the achievement of the following goals: Integration Convatech; Realization of the plans of the Australian companies; Growth goals; and Transition (the €50,000 Bonus Letter). (The reference to “Convatech” is accepted to be a reference to ConvaTech, the company that operates a conveyor belt manufacturing business in Australia which was acquired by Rema Tip Top in 2016.) The letter stated:

We will write to you further in relation to the pay-out modalities.

Please note that this concerns a one-off payment from which no future legal claim can be inferred.

110. The letter is consistent with Mr Grüterich’s account of the 16 January 2017 conversation with Mr Wach (and the wording of the letter – in particular the reference to “no future claim can be inferred” – is consistent with the language appearing in various of the earlier contract documents to which I have referred above).

111. Mr Grüterich’s response, by email to Mr Wach at 11pm on 23 January 2017, which, as I have said, makes clear that he understood that this was a draft document and related only to a bonus payment; not his overall employment arrangements, was:

Thanks for the sending of the draft Side-Letter concerning Bonus Payment 2017.

From my point of view this should be prompt if it doesn’t come to a percentage of royalties offer for the Asia Pacific Holding.

Further, goals and pay-out modalities are not or not clearly specified.

Thorsten Kopp refers to the Standard Manager’s Contract for Australia.

The duration of the drafting of the contract is no longer comprehensible for me, with reference to the time that has already been spent on it.

We are dealing here principally also with security aspects like, for example, the fixed length of contract.

In this context I must once again refer to the visa regulations over here.

We had further discussed that we would calculate the Bonus year 2016 among gentlemen. Please give your opinion on this.

I would also like to ask for a sympathetic suggestion of yours for the purpose of Basic Remuneration adjustment. Since the Australia start on 01/01/2016 I took over within the year the positions of Financial Controller, CFO, CEO a constantly growing scope of functions and more responsibility.

I would also like to talk to you about the scope of functions of my position, in particular of the non-Australian Asia-Pacific subsidiaries.

112. There is a competing translation of the above but the differences do not seem to be material for present purposes. What is clear from the above is that Mr Grüterich clearly understood, at this stage, that no new employment contract to reflect his new position as Managing Director had yet been concluded (a delay in drafting that he found incomprehensible); nor had the “security aspects” of his employment (i.e., the fixed term, if any) been agreed.

Early February 2017 communications re Australian employment contract

113. What next occurred was that, on 4 February 2017, Mr Wach emailed Mr Kopp, in relation to Mr Grüterich, saying:

All good for contract in Australia. Will just have to calculate the amounts.

For 2016 there’s again a further special payment out of 30K Euros that we will make out of D [Germany], please.

Then for 2017 we will make an award arrangement for 100,000 Australian dollars for achievement – KPI plan achievement scaled according to:

-   Turnover/EBIT

-   Transition/Merger

-    Security for ongoing service contracts (accident rates etc.) etc.

114. Mr Grüterich claims that, on 5 February 2017, Mr Wach said to him (inter alia):

… We will pay you a fixed minimum bonus, so €30,000 for 2016, then €50,000 for 2017, then maybe around €70,000 to €80,000, or €100,000 to €150,000, until you get the EBIT Share agreement ... .

115. In particular, Mr Grüterich’s evidence is that, on 5 February 2017, he had a conversation with Mr Wach, after he had driven him to the airport in Newcastle, informing Mr Wach that the draft contract failed to include all of Mr Grüterich’s current entitlements, including a fixed term. He says that Mr Wach assured him that he would receive those benefits, including the fixed term. That evidence is disputed by Rema Tip Top (though it must be noted that there was no evidence from Mr Wach – see below). In particular, in cross-examination it was put to Mr Grüterich that this conversation could not have happened as Mr Grüterich deposes because Mr Grüterich was not sent the draft Australian employment contract until 13 February 2017 (see below).

116. I deal with the credit issues raised in relation to this and other aspects of Mr Grüterich’s evidence in due course. What is, however, clear is that there is no documentary evidence to suggest that as at 5 February 2017 Mr Grüterich was in possession of a draft contract from Mr Kopp (or Mr Wach for that matter) and any such proposition would be inconsistent with the email communication from Mr Kopp of 5 February 2017. Hence, Mr Grüterich’s (quite detailed) affidavit account of this 5 February 2017 conversation simply cannot be an accurate recollection.

13 February 2017 emails

117. The email evidence suggests that draft contract documents were sent by email from Mr Kopp to Mr Grüterich, copied to Mr Wach and Mr Ubelacker, on 13 February 2017 at around 6am. Mr Kopp’s email stated “I am sending you as attachments the Australian contract as well as the agreement to terminate the contract from dbs” and that “Thorsten Wach will talk you through things personally”. (On 13 February 2017, Mr Grüterich flew to Singapore for the regional holding meeting. Whether he saw the draft employment contract when it was received by email early that morning is not clear. Rema Tip Top points to an email communication from Mr Grüterich that morning to a real estate agent in Australia in relation to his Bathurst Street apartment as demonstrating that Mr Grüterich was using his emails that morning but Mr Grüterich does not give evidence that he read this email before he arrived in Singapore.)

118. Mr Kopp’s evidence is that he had discussed the revised draft contract with Mr Wach before sending it to Mr Grüterich; that Mr Wach instructed Mr Kopp to send the document to Mr Grüterich; and that Mr Wach did not tell him that it should be changed.

119. Mr Kopp also prepared, at Mr Ubelacker’s request, a release agreement between Mr Grüterich and DBS, the purpose of which was evidently to terminate Mr Grüterich’s agreements with that company. Mr Kopp explains that this was standard practice for executives who had concluded a secondment and taken up a permanent position at a destination country. Mr Kopp says he discussed the release agreement with Mr Wach before sending it to Mr Grüterich; and that Mr Wach instructed Mr Kopp to send this document to Mr Grüterich as well.

120. The draft employment agreement sent to Mr Grüterich by email on 13 February 2017 was for Mr Grüterich’s position as Managing Director of Rema Tip Top; it specified a commencement date of 1 March 2017; it did not have a completion date; and it specified the remuneration as $268,479 gross per annum including superannuation.

14 February 2017

121. The reference in Mr Kopp’s email to Mr Wach talking “through things personally” with Mr Grüterich is consistent with the fact that, on 14 February 2017, Mr Grüterich attended a regional holding meeting at the Raffles Hotel in Singapore. The sequence of events on 14 February 2017 is not wholly clear.

122. Mr Grüterich says that at the meeting on 14 February 2017 Mr Wach handed him an employment contract in the same terms as “the draft contract” of 23 January 2017 (as noted, there is no draft contract of 23 January 2017 in evidence – the only 23 January communication is one that relates to the draft lump sum bonus letter).

123. Mr Grüterich says that he “again” (i.e., this being after he says he had already done so in the 5 February 2017 conversation to which he deposed but which I have concluded cannot have happened in these terms for the reasons set out above) pointed out that the draft contract failed to include all of his current entitlements, including the fixed term to December 2019, and that Mr Wach assured Mr Grüterich that he would continue to receive those benefits under the proposed contract.

124. According to Mr Grüterich, those benefits included: a fixed term until December 2019; four business class flights per year up to the value of $50,000, which could be used to fly to any destination without specific prior approval; all medical expenses paid under a health insurance policy; education allowance; the use of two motor vehicles; accommodation for the duration of employment; and all repatriation expenses (the alleged February 2017 Benefits). (Nowhere in the previous contract documents is there reference to four business class flights per year – the only correspondence on this issue from Mr Wach being Mr Wach’s comment that the request for private travel allowance of the land seemed “very high”. Nor is there anything in the contemporaneous documents to support the assertion that Mr Grüterich’s entitlement at that stage was to include the use of two motor vehicles.)

125. Mr Kopp’s account of the conversation he had over the telephone with Mr Grüterich and Mr Wach on 14 February 2017 (Mr Kopp not being at the Singapore meeting) is different from Mr Grüterich’s account (at [202] of Mr Grüterich’s first affidavit). Mr Kopp denies that there was any mention of a “business class travel budget”. He says he did not ask Mr Grüterich what he needed for his contract (and he says that it was not his (Mr Kopp’s) role to grant benefits to executives or to decide what to include in a contract). Mr Kopp says he prepared contracts as instructed by the relevant officer of the employing company (in this instance, Mr Wach and ultimately Mr Ubelacker). Mr Kopp deposes that he did not assure Mr Grüterich that he would receive ‘side letters’ conferring additional benefits not in his Employment Contract.

126. Mr Kopp’s evidence is that Mr Wach did not tell Mr Grüterich that he was authorised to “continue using the benefits that were given to you previously” and that he did not tell Mr Grüterich:

I told you, you have the private business class trips. Don’t bother me for approval please, we discussed this multiple times now.

127. Mr Kopp says that the only change to the revised draft contract discussed in this conversation on 14 December 2017 was an increase in the annual salary from $260,000 to $280,000. He says that Mr Ubelacker approved this change. Mr Kopp says he then sent a further revised version of the contract to Mr Grüterich on 14 February 2017, with the new salary amount added and copied Mr Wach to that email.

128. There is in evidence an email from Mr Kopp to Mr Grüterich, copied to Mr Wach, on 14 February 2017 at around 9.46pm attaching “the modified contract”. The modification appears to be the specification of the remuneration at $280,000 gross per annum including superannuation. That is consistent with Mr Kopp’s recollection of events.

129. Mr Grüterich then says that, on the same day (14 February 2017) at the Raffles Hotel Bar, in front of Mr Reiff and other senior Stahlgruber AG executives, Mr Wach handed Mr Grüterich the employment contract and a release agreement with DBS and asked him to sign them. Mr Grüterich’s evidence is that, without reviewing the documents, he signed the contract (the Employment Contract) and the release agreement with DBS (DBS Release Agreement) on the understanding that the alleged February 2017 Benefits were terms of the Employment Contract or would otherwise be extended to him by Rema Tip Top. Mr Grüterich says that he trusted Mr Wach subsequently to put in writing the terms of the agreed verbal entitlements as discussed up to and including 14 February 2017.

130. Mr Grüterich says that, upon review of the Employment Contract later that evening, he discovered that the alleged February 2017 Benefits were not expressly provided for in the Employment Contract and that the agreed salary of $280,000 was incorrectly stated as $260,000. Mr Grüterich says he immediately discussed this with Mr Wach.

131. In particular, Mr Grüterich says that when he reviewed his Employment Contract he noted that the “Business Class Private Travel Budget” had not been “incorporated into the document”. He says that he understood this had been agreed orally and would later be put into writing. Mr Grüterich says he was “unhappy” because the Employment Contract did not incorporate terms “I had repeatedly requested and had been orally agreed to”; and that he considered it a “formality” to have his “benefits” put in writing, but that:

… I increasingly considered it to be an important one, given that by this time there had been significant delays in documenting my employment arrangements properly.

132. Mr Grüterich’s evidence is that he then complained to Mr Wach (at the Singapore holding meeting) and insisted that Mr Wach “get the contract variations” for him. He claims that Mr Wach agreed to do this.

133. Rema Tip Top points to a number of logical inconsistencies between the account given by Mr Grüterich of the events on 14 February 2017 and the contemporaneous documents.

134. First, that Mr Grüterich says that Mr Wach handed him documents in the same terms as the 23 January 2017 document (when the only 23 January 2017 document, as discussed above, was the draft side letter from DBS relating to a bonus (albeit that reference was there also made to a standard form general manager’s contract)).

135. Second, that by the time of the meeting Mr Kopp had forwarded by email the draft Australian contract. Mr Grüterich says that if he received it he did not see it because he was travelling at the time. It may well be the case that Mr Grüterich did not receive or open the email until after the fight to Singapore; however, that does not explain a conversation on 14 February 2017 relating to an earlier version of the document that does not then seem to have existed.

136. Third, that it seems clear that the “modified” contract sent by Mr Kopp at around 9.46am on 14 February 2017 was a modification to the draft sent on 13 February 2017 and that the only modification was to the salary amount.

655. Further, it is submitted that for the purposes of misleading or deceptive conduct, a party to commercial negotiations is not required to volunteer information which will be of assistance to the decision-making of the other party, noting that in Miller v BMW Australia, French CJ and Kiefel J (as her Honour then was) said (at [22]):

[A]s a general proposition, s 52 does not require a party to commercial negotiations to volunteer information which will be of assistance to the decision-making of the other party. A fortiori it does not impose on a party an obligation to volunteer information in order to avoid the consequences of the careless disregard, for its own interests, of another party of equal bargaining power and competence. ...

658. It is submitted that, in the present case, any inequality of bargaining power was firmly in favour of Rema Tip Top. Mr Grüterich submits that there was no relevant misconduct; and that even if (contrary to his position) the payments were not objectively authorised, this is insufficient to establish misconduct of the kind required for termination on that basis (i.e., misconduct involving intention or knowledge). Further, it is submitted that it is not clear that conduct by an employee, in their capacity as an employee, is “in trade or commerce”.

Determination

659. As to the misleading or deceptive conduct claim, the decision to terminate Mr Grüterich’s employment was made prior to the discussions held on 15 and 16 March 2018 and was not in reliance on anything that Mr Grüterich did or did not say at the meeting at that time. Mr Labbé accepted that he was directed by Mr Reiff to travel to Australia and terminate Mr Grüterich’s employment before 14 March 2018. Further, Mr Labbé gave evidence that there was nothing Mr Grüterich could have said or done between 14 and 16 March 2018 to change the decision to terminate his employment. Mr Labbé also conceded that nothing Mr Grüterich in fact did (or did not do) between 14 and 16 March 2018 affected the decision to terminate his employment.

660. Although Mr Grüterich submits that Rema Tip Top’s misleading or deceptive conduct case ought to be dismissed on that basis alone, it seems to me that there is a distinction between the decision to terminate Mr Grüterich’s employment and the basis on which that employment was terminated (i.e., whether with notice or summarily). The decision to terminate with a notice payment was one that seems to have been made at the time of termination (having regard to Mr Slattery’s evidence as to his discussion with Mr Labbé about a mutual separation agreement and the way that these things would be done in Australia) and, relevantly, with the benefit of legal advice. As adverted to above, Mr Grüterich says, in that regard, that the misleading or deceptive conduct claim should fail for the same reasons as the mistake claim, namely that Rema Tip Top was relying upon its own investigations and inquiries in making the payment, including the assistance of an in-house auditor and external solicitors. It is in this context that the question as to whether it would need to be shown that Rema Tip Top had a reasonable expectation of disclosure by Mr Grüterich, at the time it terminated his contract, of the matters giving rise to the alleged misconduct, is raised.

661. In Semrani v Manoun; Williams v Manoun [2001] NSWCA 337 (per Beazley JA, as Her Excellency then was, Mason P and Ipp AJA agreeing), it was said (at [58]-[62]) that:

It is well established that a party can engage in misleading and deceptive conduct through silence: see for example Kimberley NZI Finance Ltd v Torero Pty Ltd (1989) ATPR 46-054; Demagogue Pty Ltd v Ramensky (1992) 39 FCR 31; Winterton Constructions Pty Ltd v Hambros Australia (1992) 39 FCR 97; Warner v Elders Rural Finance (1993) 41 FCR 399.

In Kimberley NZI Finance Ltd v Torero Pty Limited (approved by the Full Federal Court in Demagogue Pty Limited v Ramensky), French J said at 53,195:

“The cases in which silence may be … characterised [as conduct in contravention of s 52] are no doubt many and various and it would be dangerous to essay any principle by which they might be exhaustively defined. However, unless the circumstances are such as to give rise to the reasonable expectation that if some relevant fact exists it would be disclosed, it is difficult to see how mere silence could support the inference that that fact does not exist.”

Silence may more readily lead to a finding of breach of s 52 or s 42 [of the Trade Practices Act 1974 (Cth)] where there is a duty of disclosure: see Winterton Construction Pty Limited v Hambros Australia Ltd per Hill J at 114; Warner v Elders Rural Finance at 404-405.

Although an intention to deceive is not necessary for the purposes of s 42: see Yorke v Lucas (1985) 158 CLR 661, Puxu Pty Ltd v Parkdale Custom Built Furniture Pty Ltd (1982) 149 CLR 191, a person cannot engage in conduct in contravention of the section unless the person has actual knowledge of the matter said to be misleading or deceptive: see Gurr & Gurr v Forbes (1996) 80 ATPR 41-491.

The combined effect of the Act and the authorities therefore, is that for Williams’ silence to be actionable, he must have had actual knowledge of a matter which he intentionally refrained from telling Manoun in circumstances where there was either a duty to disclose or where Manoun had a reasonable expectation that such information would be disclosed to him.

662. In Metalcorp Recyclers Pty Limited v Metal Manufactures Limited [2003] NSWCA 213; (2004) ATPR (Digest) 46-243 (Handley JA with Hodgson JA and Gzell J agreeing) said (at [14]-[15]):

A finding of misleading or deceptive conduct is open where that conduct, by word or deed, conveyed a misrepresentation (Wardley Australia Ltd v Western Australia (1992) 175 CLR 514). In this case the misrepresentation is said to have been conveyed by silence, but that is an inadequate and incomplete description. The relevant principles were felicitously summarised by Black CJ in Demagogue Pty Limited v Ramensky (1992) 39 FCR 31, 32:

“Silence is to be assessed as a circumstance like any other. To say this is certainly not to impose any general duty of disclosure; the question is simply whether, having regard to all the relevant circumstances, there has been conduct that is misleading or deceptive ... to speak of ‘mere silence’ or a duty of disclosure can divert attention from that primary question. Although ‘mere silence’ is a convenient way of describing some fact situations, there is in truth no such thing as ‘mere silence’ because the significance of silence always falls to be considered in the context in which it occurs. That context may or may not include facts giving rise to a reasonable expectation, in the circumstances of the case, that if particular matters exist they will be disclosed”.

The misleading and deceptive conduct relied upon was that of Mr Cook during the critical conversation. As Black CJ said, silence that is capable of being misleading or deceptive never stands alone. In the absence of some positive duty to speak, silence can only be misleading or deceptive against a background of other facts known to both parties which make what is actually said so incomplete that it conveys a misrepresentation.

663. Were it necessary here to determine the 'reasonable expectation' issue raised in the parties’ competing submissions in this case, I would have concluded that silence is misleading and deceptive only in circumstances where there is a duty to disclose (which ultimately is a factual question). In this sense, I agree with what was said by French J, as his Honour then was, in Kimberley NZI Finance Ltd v Torero Pty Ltd [1989] ATPR (Digest) 53,193 that “unless the circumstances are such as to give rise to the reasonable expectation that if some relevant fact exists it would be disclosed, it is difficult to see how mere silence could support the inference that that fact does not exist”.

664. There is also some force to the proposition that there would not be a reasonable expectation on the part of an employee being summarily dismissed for misconduct in effect to confess his or her sins over the period of the employment there being terminated (especially in circumstances where I have concluded that some of Mr Grüterich’s conduct was not knowingly dishonest). Here, of course, Mr Grüterich was not just silent as to the conduct of which Rema Tip Top now complains but he actually prepared the list of entitlements (which was at the least misleading) and, though he may have done so in haste, he did review it at least once and provided an updated spreadsheet with updated calculations.

665. In any event, whether or not the ‘reasonable expectation’ analysis is required, I am not satisfied that the conduct of Mr Grüterich in putting forward the “entitlements spreadsheets” was misleading or deceptive. I accept that it reflected his view at the time of his entitlements (albeit that he now concedes he was mistaken as to aspects of the spreadsheet schedules) and notwithstanding that at least the second of the versions seems to have built into it scope for “negotiation” as to his claimed entitlements.

666. Furthermore, I consider that it is clear that Rema Tip Top chose not to explore further the circumstances surrounding Mr Grüterich’s claimed entitlements and to that extent did not rely on any representation arising from Mr Grüterich’s “silence” or failure to disclose his misconduct when terminating the contract.

667. I have therefore concluded that Rema Tip Top’s claim for restitution of the Notice Payment and for damages for misleading or deceptive conduct in relation thereto have not been made good.

Trust claim

668. Rema Tip Top contends that the receipt of the car allowance payments, the double salary payments and the bonus payment were all instances of dishonest misappropriation of Rema Tip Top’s moneys by Mr Grüterich.

669. It says that the moneys were impressed with a trust in the hands of Mr Grüterich (citing Black v S Freedman & Co (1910) 12 CLR 105 at 110; [1910] HCA 58; Robb Evans of Robb Evans & Associates v European Bank Ltd (2004) 61 NSWLR 75; [2004] NSWCA 82; Wambo Coal Pty Ltd v Ariff [2007] NSWSC 589 at [40] (Wambo Coal) (per White J), as his Honour then was)); alternatively, that the moneys were received in breach of fiduciary duty and are held by Mr Grüterich on constructive trust for Rema Tip Top (citing Hospital Products at 107-108; [1984] HCA 64 (per Mason J)).

670. Rema Tip Top seeks a declaration that these moneys are held on trust by Mr Grüterich for its benefit and an order that they be repaid to it.

671. It is noted that in Wambo Coal White J (as His Honour then was) said at [40]:

… Where property is stolen, the property is trust property in the hands of the thief and can be traced into the hands of a third party who receives the property otherwise than as a bona fide purchaser of the legal estate for value without notice. The property is trust property in the hands of the thief because the thief is bound in conscience to hold the property on behalf of its true owner. Whether the trust is characterised as a resulting trust, or as a constructive trust, the trust is of an institutional rather than a remedial character. It arises because the conscience of the thief is bound. [citations omitted]

672. Rema Tip Top seeks to trace those trust moneys into Mr Grüterich’s bank accounts (referring to Foskett v McKeown [2001] 1 AC 102 at 127) and seeks an order that funds held in the HSBC bank account be released to it in the amount of $195,960.87 (gross).

Determination

673. I have concluded (aware as I am of the degree of satisfaction necessary for such a finding) that the directions for payment of the car allowance, the double salary payments and the business class private travel expenses (as opposed to the travel expenses claimed as being for business purposes and dealt with separately in these reasons) were not honestly made and accordingly the declarations of trust and tracing remedies as sought should be granted. As for the bonus payment, I have concluded that it was mistakenly made (but not that there was dishonesty in relation to its receipt) but that there should be a repayment of that amount by way of restitution as the retention of that benefit by Mr Grüterich would be unjust. As to the balance of the unauthorised expenses I am satisfied that they were obtained (and have been retained) in breach of fiduciary duty such that a declaration of constructive trust should be made.

Overpayment of annual leave on termination

674. Mr Grüterich concedes that he was overpaid his annual leave by an amount equivalent to 15 days. (His evidence is that, from his experience of the companies in the Rema Group in which he worked, he did not appreciate that he had to record annual leave. That is not necessary here to explore since the relief sought is simply as to its repayment.) An order should be made for repayment of the amount conceded to have been overpaid (which I understand to be $24,751.39).

Cross-claim

675. The principal claim by Mr Grüterich on his cross-claim (based on a variation of the Employment Contract to include the Fixed Term) or for misleading or deceptive conduct in that regard, in respect of the loss of salary to 31 December 2019 has failed for the reasons already set out. Mr Grüterich, “for commercial reasons and on a without admissions basis”, did not press the smaller heads of claim in his cross-claim in respect of Rema Tip Top’s claim.

676. That leaves Mr Grüterich’s claim to have been wrongly denied long service leave accruals on termination of his employment. Rema Tip Top submits that Mr Grüterich’s misconduct deprived him of a right to any payment in respect of long service leave upon termination of his employment (relying on s 4(2)(a)(iii) of the Long Service Leave Act) and argues that this claim should be dismissed

677. Section 4 of the Long Service Leave Act sets out the statutory calculation for long service leave and the circumstances in which the leave can be taken or paid out. Long service leave is accrued during time spent with an “employer”, which is defined in s 3 as “any person employing any worker or workers and includes the Crown”.

678. Section 4(13)(c) of the Long Service Leave Act provides:

Where before or after the commencement of the Long Service Leave (Amendment) Act 1967 a worker has transferred from the service of an employer (in this paragraph called the first employer) being a corporation to the service of another employer being a corporation related to the first employer at the time of that transfer, then for the purposes of this section:

(i)    the continuity of the period of service of the worker shall be deemed not to have been broken by reason of the transfer, and

(ii)    the period of service which the worker has had with the first employer before the commencement of the service of the worker with that other employer (including any service which by reason of a prior transfer or prior transfers or for any other reason the worker is deemed by this section or, for the purposes of long service leave for such service, the worker is deemed by any Act or award to have had with the first employer) shall be deemed to be service of the worker with that other employer.

679. Mr Grüterich says that his employment prior to the Employment Contract is counted because his former employers were corporations related to Rema Tip Top.

680. Mr Grüterich accepts that by s 4(2)(a)(iii) of the Long Service Leave Act “serious and wilful misconduct” may disentitle an employee to accrued long service leave but he notes that he was not dismissed for misconduct and argues that the facts do not establish this. Further, it is noted that cl 16.1 of the Employment Contract provided:

If the Executive’s employment is terminated for any reason, the Employer will pay the Executive the Executive’s’ accrued and untaken annual leave and long service leave.

681. Mr Grüterich says that cl 16.1 is inconsistent with Rema Tip Top’s defence to the Long Service Leave Act claim and says that this claim should not be disallowed.

Determination

682. Section 4(1) of the Long Service Leave Act states that:

Except as otherwise provided in this Act, every worker shall be entitled to long service leave on ordinary pay in respect of the service of the worker with an employer … .

683. Pursuant to s 4(2)(a)(iii), the amount of long service leave to which a worker shall be so entitled shall:

in the case of a worker who has completed with an employer at least five years service, and whose services are terminated by the employer for any reason other than the worker’s serious and wilful misconduct, or by the worker on account of illness, incapacity or domestic or other pressing necessity, or by reason of the death of the worker, be a proportionate amount on the basis of 2 months for 10 years service.

684. The phrase “serious and wilful misconduct” is not defined in the Long Service Leave Act but the case law indicates (particularly see McDonald v Parnell Laboratories (Aust) Pty Ltd [2007] FCA 1903 (McDonald v Parnell Laboratories)) that it is understood as having the same meaning attributed to serious and wilful misconduct in the case law (including cases such as Blyth Chemicals).

685. The following extract from McDonald v Parnell Laboratories (per Buchanan J) (at [48]) has been cited on numerous occasions:

The terms ‘misconduct’, ‘serious misconduct’ and ‘serious and wilful misconduct’ are often the subject of judicial and administrative attention as applied to the facts of particular cases but there is relatively little judicial discussion about their content and meaning. Naturally enough, when the term ‘serious misconduct’ is under consideration an evaluation of what conduct represents ‘serious’ misconduct is influenced by the (usually statutory) setting in which the phrase must be given meaning and applied. Frequently, for example, the question at issue is whether an employee is disentitled by reason of his or her conduct to a statutory entitlement (eg. in New South Wales, where Ms McDonald was employed, see Long Service Leave Act 1955 (NSW) s 4(2)(a)(iii); Workers Compensation Act 1987 (NSW) s 14(2)[)].

686. In Portelli v Polar Fresh Cold Chain Services Pty Ltd (t/as Polar Fresh) [2016] FWC 3519, the applicant argued that his dismissal from a refrigerated goods storage and distribution business on the basis of absences from work that did not comply with the circumstances when leave might be taken according to the relevant contract, was unfair. Amongst other things, in holding that the dismissal was not unfair, Hatcher VP of the Fair Work Commission took into consideration that (see at [45(5)]):

It is well arguable that Polar Fresh would have been entitled to summarily dismiss Mr Portelli, and deny him his long service leave on the basis that he had committed serious and wilful misconduct [citing s 4(2)(a)(iii) of the Long Service Leave Act 1955 (NSW)]. However they treated him generously by dismissing him with a payment in lieu of notice and paying out his long service leave, which provided him with about eleven weeks’ income on termination.

687. In my opinion, the proper construction of s 4(2)(a)(iii) is to focus on the actual basis or reason for termination (i.e., whether the employee’s services “are terminated by the employer for any reason other than the worker’s serious and wilful misconduct”) not whether some other basis for termination would have been available under which an entitlement to long service leave would not have arisen. Apart from the text of the section, which focusses on the reason for the termination (not whether some other basis for termination may have been available), I have in mind the fact that contracting out of the legislation is prohibited (see s 7 of the Long Service Leave Act), which reinforces the emphasis placed by the legislature on such statutory entitlements and suggests that such entitlements are not lightly to be taken as having been lost. I was not taken to any authorities in which the present situation has arisen (of a valid termination without cause but where the employment could validly have been terminated for serious misconduct) in the context of disputed long service leave entitlements (nor have I been able to find any). I consider that a literal interpretation should be given to the legislation as most consistent with the evident purpose of the legislation.

687. Therefore I have concluded that the fact that Mr Grüterich’s employment was terminated with a payment in lieu of notice, and not for misconduct, means that he is entitled to accrued long service leave up to the date of termination of his employment. Such a conclusion is consistent with cl 16.1 of his Employment Contract and therefore it is not necessary to consider the arguments raised as to the operation of cl 16.1 independently or otherwise of the relevant provisions of the legislation. Accordingly, an order should be made for the payment of the long service leave accrued from the time of Mr Grüterich’s employment with DBS, a related corporation.

Costs

689. As to costs, in light of the mixed outcome on the respective claims, I will make directions for written submissions to be provided within seven days with a view to determining this on the papers and I will give liberty to apply in case there is any difficulty in the implementation of these orders.

Orders

690. For the reasons set out above, I make the following orders and declarations:

1. Declare that the plaintiff would have been justified in terminating the contract of employment between itself and the defendant on 16 March 2018 for serious misconduct by the defendant.

2. Declare that moneys in respect of the car allowance, the double salary payments and the expenses said to be incurred under the claimed private business class travel budget (as opposed to the claimed business travel expenses on Mr Grüterich’s company credit card) totalling $187,037.67 were wilfully and dishonestly misappropriated by the defendant and that those moneys were impressed with a presumed or resulting trust and are held on trust by the defendant for the benefit of the plaintiff.

3. Declare that those moneys, together with the moneys in respect of the bonus payment of $103,210.88 and the unauthorised credit card expenses (including the Poliform furniture deposit) totalling $21,413.75, that the defendant caused to be paid to himself or for his benefit in breach of his fiduciary duty not to make an unauthorised profit from his position, are held by the defendant subject to a constructive trust in the plaintiff’s favour.

4. Order that, subject to the set-off ordered below, funds held in the HSBC bank account to the amount of $311,662.30 (being the total of the amounts the subject of the trust declarations in Orders 2 and 3 above) be released to the plaintiff.

5. Order that the defendant pay the following sums to the plaintiff (totalling $336,413.69) as damages (for breach of contract, in equity or under s 1317H of the Corporations Act 2001 (Cth) for breach of fiduciary or statutory duties owed by the defendant as managing director of the plaintiff) and/or by way of restitution:

1. Car allowance: $22,750.

2. Double salary: $69,999.99.

3. Bonus payment: $103,210.88.

4. Poliform furniture: $9,616.40.

5. Travel expenses: $94,287.68.

6. Annual leave overpayment: $24,751.39.

7. Other miscellaneous credit card expenses: $11,797.35.

6. Order the payment of interest up to judgment on the above amounts.

7. Order that the plaintiff pay to the defendant accrued long service leave calculated taking into account his employment within the Rema Group of companies from 25 October 2012 to the date of termination of his employment on 16 March 2018, with interest calculated up to judgment on that amount, but otherwise dismiss the defendant’s cross-claim.

8. Order that the amounts payable pursuant to the plaintiff under Orders 4 and 5 be set-off against the amount ordered to be paid to the defendant under Order 7; with the remaining balance of the amounts so ordered to be paid to the plaintiff or the defendant, as the case may be, within 28 days.

9. Reserve the question of costs to be dealt with on the papers following any further brief written submissions on that issue.

10. Liberty to apply on three days’ notice for any variation necessary to correct any error in the calculation of the above amounts or otherwise in relation to the working out of the above orders.

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Decision last updated: 18 November 2019