Roohizadegan v TechnologyOne Limited (No 2)
[2020] FCA 1407
•2 October 2020
Federal Court of Australia
Roohizadegan v TechnologyOne Limited (No 2) [2020] FCA 1407
File number: VID 996 of 2016 Judgment of: KERR J Date of judgment: 2 October 2020 Catchwords: INDUSTRIAL LAW – general protections – adverse action contrary to Fair Work Act 2009 (Cth) s 340 – where Applicant’s employment terminated after he made seven complaints regarding bullying – operation of statutory presumption in s 361(1) – Respondents found not to have discharged onus of proving that complaints, being exercises of the Applicant’s workplace rights, not a reason for termination of his employment – adverse action established
INDUSTRIAL LAW – remedies – adverse action – pecuniary penalties awarded and ordered to be paid to the Applicant pursuant to Fair Work Act 2009 (Cth) s 546
INDUSTRIAL LAW – remedies – adverse action – where psychiatric evidence established the Respondents’ conduct had caused a significant aggravation of the Applicant’s pre-existing depressive disorder, which had resulted in the Applicant losing capacity to work – where psychiatric evidence also established a poor prognosis for the Applicant ever again being able to work in roles for which he would otherwise be qualified – compensation awarded to Applicant pursuant to Fair Work Act 2009 (Cth) s 545 for economic loss and as compensation analogous to general damages
CONTRACTS – where Applicant alleged breach of contract of employment by reason of non-payment of certain incentives due to him since 2009 – where contract had been varied on several occasions – consideration of Concut Pty Ltd v Worrell [2000] HCA 64; 176 ALR 693 – finding that neither textual nor contextual considerations supported Respondents’ preferred construction – breach of contract established – damages awarded
Legislation: Fair Work Act 2009 (Cth) ss 340, 341, 351, 360, 361, 539, 542, 545, 546 Cases cited: AustralianBuilding and Construction Commissioner v CoreStaff WA Pty Ltd [2020] FCA 893
Australian Building and Construction Commissioner v Hall [2018] FCAFC 83; 261 FCR 347
Board of Bendigo Regional Institute of Technical and Further Education v Barclay [2012] HCA 32; 248 CLR 500
Burazin v Blacktown City Guardian Pty Ltd (1996) 142 ALR 144
Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; 149 CLR 337
Collison v Brighton Road Enterprises Pty Ltd (No 2) [2016] FCCA 1798
Commonwealth v Director, Fair Work Building Industry Inspectorate [2015] HCA 46; 258 CLR 482
Concut Pty Ltd v Worrell [2000] HCA 64; 176 ALR 693
Construction, Forestry, Maritime, Mining and Energy Union v Melbourne Precast Concrete Nominees Pty Ltd (No 3) [2020] FCA 1309
Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd [2014] HCA 41; 253 CLR 243
Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd [2016] FCA 987
Dafallah v Fair Work Commission [2014] FCA 328; 225 FCR 559
Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; 218 CLR 471
Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; 209 CLR 95
Fair Work Ombudsman v Construction, Forestry, Maritime Mining and Energy Union [2019] FCAFC 69Kaur v Minister for Immigration and BorderProtection [2019] FCAFC 53; 269 FCR 464
General Motors-Holden’s Pty Ltd v Bowling (1976) 12 ALR 605
Graham v Baker [1961] HCA 48; 106 CLR 340
Jones v Dunkel [1959] HCA 8; 101 CLR 298
Matthews v Winslow Constructors(Vic) Pty Ltd [2015] VSC 728
Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20; 229 FCR 221
Mt Bruce v Wright Prospecting [2015] HCA 37; 256 CLR 104
O’Brien v Dunsdon (1965) 39 ALJR 78Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; 218 CLR 451
Pascoe v Commissioner of Taxation (1956) 30 ALJ 402
PIA Mortgage Services Pty Ltd v King [2020] FCAFC 15
Planet Fisheries Pty Ltd v La Rosa [1968] HCA 62; 119 CLR 118
Purkess v Crittenden [1965] HCA 34; 114 CLR 164.
RailPro Services Pty Ltd v Flavel [2015] FCA 504; 242 FCR 424Reardon Smith Line Ltd v Hansen-Tangen [1976] 1 WLR 989
Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5; 240 CLR 45
Shea v TRUenergy Pty Ltd (No 6) [2014] FCA 271
Stanley v Service to Youth Council Inc (No 3) [2014] FCA 716; 225 FCR 357
State of Victoria (Office of Public Prosecution) v Grant [2014] FCAFC 184; 246 IR 441
Teubner v Humble [1963] HCA 11; 108 CLR 491
Thatcher v Charles [1961] HCA 5; 104 CLR 57
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52
Watts v Rake [1960] HCA 58; 108 CLR 158
Willett v Victoria [2013] VSCA 76; 42 VR 571
Wright v Optus [2014] NSWSC 160Wynn v NSW Insurance Ministerial Corporation [1995] HCA 53; 184 CLR 485
Division: Fair Work Division Registry: Victoria National Practice Area: Employment and Industrial Relations Number of paragraphs: 1114 Date of last submissions: 4 November 2019 Date of hearing: 9-11, 14-18, 21-23, 30-31 October and 4 November 2019 Counsel for the Applicant: Mr J Tracey and Mr R Minson Solicitor for the Applicant: Harmers Workplace Lawyers Counsel for the Respondents: Dr M Spry Solicitor for the Respondents: Cooper Grace Ward ORDERS
VID 996 of 2016 BETWEEN: BENHAM ROOHIZADEGAN
Applicant
AND: TECHNOLOGYONE LIMITED
First Respondent
ADRIAN DI MARCO
Second Respondent
order made by:
KERR J
DATE OF ORDER:
2 October 2020
THE COURT ORDERS THAT:
1.The Applicant’s application made pursuant to the Fair Work Act 2009 (Cth) (the Fair Work Act) be upheld.
2.Pursuant to s 546 of the Fair Work Act:
(a) the First Respondent pay a penalty of $40,000.00; and
(b) the Second Respondent pay a penalty of $7,000.00.
3.Pursuant to s 546(3)(c) of the Fair Work Act, the penalties imposed pursuant to Order 2 be paid to the Applicant.
4.Subject to Order 9 in respect of pre-judgment interest to be awarded thereon, pursuant to s 545 of the Fair Work Act the First Respondent pay to the Applicant the sum of $756,410.00 as compensation in respect of his forgone share options.
5.Pursuant to s 545 of the Fair Work Act, the First Respondent pay to the Applicant the sum of $2,825,000.00 as compensation for his future economic loss.
6.Pursuant to s 545 of the Fair Work Act, the First Respondent pay to the Applicant the sum of $10,000.00 as compensation analogous to general damages.
7.In respect of the Applicant’s associated claim in contract against the First Respondent there be judgment for the Applicant.
8.Subject to Order 9 in respect of pre-judgment interest to be awarded thereon, the Applicant be awarded damages for breach of contract in the sum of $1,590,000.00.
9.The parties are to confer with the aim of providing the Court with agreed proposed orders as to what, if any, amounts should be awarded by way of pre-judgment interest additional to the compensation and damages awarded pursuant to Orders 4 and 8, no later than 14 days from the date of publication of these reasons.
10.If proposed orders cannot be agreed pursuant to Order 9, the parties are to provide the Court with their separate proposed orders and may file any written submissions (of no more than 2 pages) on which they would wish to rely with respect to those proposals, no later than 21 days from the date of publication of these reasons.
11.Subject to Orders 12-14, there be no order as to costs.
12.If a party seeks an order for costs, that party shall file and serve written submissions (of no more than 5 pages) within 14 days of the publication of these reasons.
13.If submissions are filed pursuant to Order 12, the party seeking an alternative order shall file and serve any responsive submissions (of no more than 5 pages) within 28 days of the publication of these reasons.
14.Any application for such orders in respect of costs to be determined on the papers.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
KERR J:
Table of contents
Synopsis of this case
[1]
History and background findings: things start well
[6]
Mr Roohizadegan suffers personal crisis and ongoing Depression
[24]
TechnologyOne remains unaware of the extent of Mr Roohizadegan’s distress
[32]
Mr Roohizadegan’s performance at work does not materially decline notwithstanding his (later diagnosed) depressive disorder
[40]
The core of Mr Roohizadegan’s dismissal case
[46]
The statutory presumption and the Respondents’ case
[63]
Dramatis personae
[82]
Chronology
[83]
The evidence and the credit of the principal witnesses
[86]
Principles applied
[86]
Benham Roohizadegan
[93]
Applicant’s submissions
[156]
Respondents’ submissions
[157]
Consideration
[158]
Adrian Di Marco
[188]
Applicant’s submissions
[201]
Respondents’ submissions
[202]
Consideration
[203]
Martin Harwood
[267]
Applicant’s submissions
[297]
Respondents’ submissions
[298]
Consideration
[299]
Stuart MacDonald
[332]
Applicant’s submissions
[351]
Respondents’ submissions
[352]
Consideration
[353]
The other witnesses
[376]
Other witnesses called on behalf of Mr Roohizadegan
[384]
Mr Kinkade
[384]
Mr Mandie
[386]
Mr Ivancic
[390]
Ms Hamson
[420]
Mr Price
[426]
Mr Luczek
[433]
Mr Dalton
[437]
Mr Thompson
[440]
Mr David MacDonald
[452]
Mr Di Guilmi
[461]
Mr Pantano
[467]
Mr Davey
[474]
Other witnesses called on behalf of the Respondents
[478]
Mr Preston
[478]
Mr Jarman
[503]
Mr Dugina
[523]
Mr Finch
[537]
Mr Metcalfe
[548]
Mr Irwin
[573]
Mr Orchard
[585]
Mr Arnott
[597]
Mr Pye
[615]
Ms Carr
[641]
Ms Gibbons
[695]
Mr Whiteley
[746]
Mr Chung
[750]
The expert witnesses
[816]
Executive search and recruitment
[816]
The expert medical evidence
[827]
Consideration of expert medical evidence
[844]
The single area of disagreement
[858]
Method of termination
[873]
The expert accounting/financial evidence
[876]
Did Mr Roohizadegan make the complaints he pleads?
[898]
Who was the decision maker and when was the decision taken?
[913]
Do the Respondents displace the statutory presumption that the adverse action they took against Mr Roohizadegan was for a prohibited reason?
[967]
Remedies for breach
[1007]
Pecuniary penalties
[1010]
Compensation for loss and other orders pursuant to s 545 of the Fair Work Act
[1021]
Forgone share options
[1023]
Future economic loss
[1026]
Mitigation
[1033]
Contingencies
[1034]
General damages
[1065]
Special damages
[1076]
Contract claim
[1077]
Costs
[1113]
Synopsis of this case
The First Respondent, TechnologyOne Limited (TechnologyOne), is a publicly listed enterprise software company. At all times material to these proceedings Mr Adrian Di Marco, the Second Respondent, was Executive Chairman and Chief Executive Officer of TechnologyOne.
This case concerns proceedings brought by the Applicant Mr Benham Roohizadegan, a former senior employee of TechnologyOne, against the company and Mr Di Marco. Mr Roohizadegan seeks compensation and penalties arising out of what he alleges was his summary dismissal on 18 May 2016. He claims that his dismissal was for a reason that is, or reasons that are, prohibited by s 340(1) and/or s 351 of the Fair Work Act 2009 (Cth) (Fair Work Act).
TechnologyOne denies that Mr Roohizadegan was dismissed for the reason, or for any reasons including, that he had exercised a workplace right as is protected by those provisions of the Fair Work Act. It says that Mr Di Marco alone made the decision to terminate his employment. It pleads that Mr Di Marco dismissed Mr Roohizadegan solely for the lawful and valid reasons of which he gave evidence in these proceedings.
Assuming the Court finds the First Respondent liable for breaches of the Fair Work Act in respect of Mr Roohizadegan’s termination (which is denied), Mr Di Marco does not dispute his accessorial involvement in that regard.
Additionally, Mr Roohizadegan seeks damages for breach of contract by TechnologyOne in respect of its alleged non-payment of part of the incentives due to him since 26 November 2009 as a percentage of the Profit Before Tax performance of TechnologyOne’s “Business Unit 03 –Victoria - Service Delivery”. TechnologyOne denies that he is owed any such outstanding payments.
History and background findings: things start well
Mr Roohizadegan commenced employment with TechnologyOne as State Manager for Victoria on 3 July 2006.
When Mr Roohizadegan joined TechnologyOne, it was then a relatively smaller company. It had only a modest footprint in Victoria. However, under Mr Di Marco’s leadership it was setting ambitious growth targets. Mr Di Marco’s evidence is that, together with his former direct report Roger Phare, Mr Roohizadegan had built the Victorian region “from very small to very large” (T519, line 29).
Mr Di Marco’s evidence is that in 2006 TechnologyOne had 377 employees, its annual revenue for the 2005/06 financial year (which I interpolate from the evidence before me then ended on 30 June 2006 but was later changed to end, for TechnologyOne’s accounting purposes, on 30 September 2006) was $66.485 million, and licence fees were $17.150 million. By 2016, TechnologyOne had grown significantly. It had about 1000 employees, its annual revenue for the 2015/16 financial year (ending 30 September 2016) was $249 million, and licence fees were $56 million.
During his pre-employment interview Mr Di Marco told Mr Roohizadegan that if he was successful during his time at TechnologyOne, he “would make a lot of money”. That proved to be an accurate prediction.
Mr Roohizadegan’s gross income increased from $208,932.00 in the 2006/07 financial year to $845,128.00 in the 2015/16 financial year. Most of that increase was attributable to incentive payments; Mr Roohizadegan’s base salary increased only from $165,000.00 to $192,000.00 (see as submitted for by Mr Roohizadegan’s counsel at [888] below) during the same period.
Mr Roohizadegan’s initial employment agreement (dated 3 July 2006) provided that he was to be paid a base salary and a bonus or “incentive” based upon the Profit Before Tax (PBT) performance of the Victorian “region”.
It is uncontentious that TechnologyOne operated for some purposes as if it were divided into semi-autonomous components. Each component (however described) reported to the company’s head office, located in Brisbane. It is similarly uncontentious that Mr Roohizadegan was appointed to be responsible for the management of the Victorian region.
Mr Roohizadegan’s employment contract was first varied on 7 March 2007. The terms of his employment were subsequently substituted for by a written agreement dated 26 November 2009. That agreement specified that, in addition to his base salary, Mr Roohizadegan was to be paid an incentive based on “PBT performance for Business Unit 03 – Victoria – Service Delivery”. The percentage specified was 7.5% from 1 October 2009 to 30 September 2010 and 7% thereafter.
It is uncontentious that in the 26 November 2009 agreement Mr Roohizadegan’s title, “State Manager”, remained the same. The Respondents however submit that, inter-alia, the change to the name “Business Unit 03 – Victoria – Service Delivery” to describe the component of TechnologyOne in respect of which PBT was to be measured for the purpose of calculating his incentives is of significance. Mr Roohizadegan takes issue with that proposition. He says that he remained (as he had always been) entitled to be paid an incentive based on his agreed share of PBT for all sales TechnologyOne made in the geographical region of Victoria.
There were further variations to Mr Roohizadegan’s employment agreement, dated 12 December 2014 and 13 November 2015 respectively. It is however common ground that those variations have no bearing upon the disposition of this matter.
According to Mr Roohizadegan, the total revenue for the Victorian region of TechnologyOne grew from approximately $8.4 million for the 2005/06 financial year to approximately $46.9 million for the 2014/15 financial year (Ex A30, CB132). That evidence is not in dispute.
Mr Roohizadegan received the TechnologyOne Chairman’s Award in 2010, 2012, 2013 and 2014. His uncontested evidence was that each year that award is given to only four to six of TechnologyOne’s approximately 800 to 1,000 employees.
It is thus undisputed that for the greatest part of his service, Mr Roohizadegan’s employment was of significant mutual financial benefit to both him and TechnologyOne. I take it to be in recognition of that mutuality that Mr Roohizadegan was granted share options in the First Respondent in 2013, 2014 and 2015 in addition to his contracted remuneration. Such a benefit was not granted to any other State Manager.
Mr Di Marco and the First Respondent acknowledge that until the circumstances that had led him to dismiss Mr Roohizadegan arose, Mr Di Marco had viewed him as a “real hunter”. Mr Di Marco accepts that Mr Roohizadegan had brought in some big deals for TechnologyOne. In his evidence-in-chief Mr Di Marco described Mr Roohizadegan as having been “really hardworking”, committed and loyal to the business (T519, lines 30-32).
Mr Di Marco qualified that laudatory description in his oral evidence by observing that from 2014, he had begun to question whether Mr Roohizadegan might be the right person to take the business forward.
Nonetheless, Mr Di Marco gave oral evidence that until the events which led to him to terminate Mr Roohizadegan’s employment occurred in 2016 he had remained confident that if Mr Roohizadegan had support from, and was mentored by, his direct report (TechnologyOne’s National Operating Officer for sales) “we could make that work” (T519, lines 29-39).
He had thought bringing in a new National Operating Officer would ensure success in that regard (T520):
It would assist Behnam. Someone who could mentor Behnam, who could bring the disciplines and help Behnam with those disciplines, and also help … structure Victoria for the next stage of growth, so to bring someone in to help him and to help the other regions, and I was confident that combining that with the other good things that Behnam did, because he was very hard working, very committed, very loyal and a good hunter, you know, that we could make this work, and so I was very positive at that point through 2015, 14-15, that this could work.
I note that there is one significant qualification I ought to record with respect to these introductory observations. At paragraph [11] of Mr Di Marco’s affidavit (Ex R31) he deposes that “over time” he had become aware that others saw Mr Roohizadegan differently. He deposes that as early as December 2007 he had received a complaint from a long serving employee, Mr Bernard Morris, about Mr Roohizadegan. I return to that specific evidence later in these reasons in regard to my findings as to Mr Di Marco’s credibility.
Mr Roohizadegan suffers personal crisis and ongoing Depression
On the surface, things were thus going very well at work for Mr Roohizadegan. However, it is uncontentious that from late 2010 he had come to grapple with a self-perceived burden of guilt.
In September 2010, Mr Roohizadegan’s then 14 year old daughter became ill (T159). He did not go to the hospital with her at that time. He had thought it vital to finalise an important deal on behalf of TechnologyOne before the end of the company’s financial year (T163). It is not in contest that as a result of that decision Mr Roohizadegan experienced extreme feelings of guilt about his then lack of involvement in his daughter’s care.
It is uncontentious that Mr Roohizadegan’s daughter was hospitalised for full time care in late 2010 after she had been diagnosed with Kawasaki disease (T162). She had required open-heart surgery in January 2011 (T161).
Mr Roohizadegan’s evidence is that outside of the work environment, his feelings of guilt had a significant impact on his family and his personal life. Mr Roohizadegan escaped his pain in work.
Mr Roohizadegan identified his feelings of guilt as stemming from his inappropriately having prioritised his work for TechnologyOne over his daughter’s life and health. It is therefore perhaps cruelly ironic that Mr Roohizadegan’s evidence is that in order to avoid that distress, work became the one safe place where he could “escape”. He therefore increased his already long working hours (T163).
Outside of work however, Mr Roohizadegan could not escape his grief. He became emotionally closed off from his wife. Predictably, that gave rise to tensions within their marriage. Mr Roohizadegan gave evidence, which I accept, that at various times the marital relationship had been on the verge of breaking down. Mr Roohizadegan also experienced repeated thoughts of suicide. On at least one occasion he had taken steps, ultimately not implemented, directed towards that end.
The Respondents’ counsel Dr Spry’s cross-examination of Mr Roohizadegan proceeded on the premise that his having suffered feelings of guilt after his daughter had become ill was not in dispute.
Mr Roohizadegan’s evidence is that he had told Mr Di Marco about his daughter’s grave illness shortly after becoming aware of its seriousness. However, he had he kept silent about his own suffering.
TechnologyOne remains unaware of the extent of Mr Roohizadegan’s distress
I proceed on the basis that beyond confirming to his work colleagues from time to time that he remained concerned about his daughter’s health, Mr Roohizadegan was careful not to reveal to anyone at TechnologyOne the depth of his private turmoil. Being able to focus on the practical problems of work without anyone at TechnologyOne knowing about his damaged condition allowed him to hide in his safe place, numb to his grief and pain.
There is no evidence at all to suggest that Mr Di Marco, or anyone else at TechnologyOne, at any time in the years that followed had the least inkling that Mr Roohizadegan was suffering from or had suffered a psychiatric illness (being a depressive disorder, as was the conclusion of the experts who gave evidence in this trial) until after he had been summarily dismissed. The Court has no reason to doubt the evidence that Mr Di Marco gave in describing what occurred after the meeting at which Mr Roohizadegan’s employment was terminated:
Dr Spry: Did he come back, or did he just leave?
Mr Di Marco: He talked to Kathy on the way out, and then he left, so I was very surprised with the whole way the meeting had gone. It was not what I expected. Kathy then talked to me. She said that he had made some concerning comments, something about jumping off a bridge. I didn’t believe it, you know. I was not aware of any mental health issues that Behnam had. They had never been raised. I didn’t know about that, so, to me, I couldn’t see why he would jump off a bridge. I mean, he’s paid $1 million a year, you know. He’s paid to deliver and perform. If you don’t, you leave, and we separated as nicely as possible. Why would you do that? So I didn’t believe it, but I said to Kathy, “Still, you need to follow up and you need to make sure he’s fine, just in case, and keep me informed.” And that was basically it.
Mr Chung, who at the time had been TechnologyOne’s Chief Operating Officer and had known Mr Roohizadegan for several years prior to his dismissal, gave evidence under cross-examination that when he had been told that Mr Roohizadegan had spoken of suicide after being dismissed his immediate reaction had been that Mr Roohizadegan was trying it on. I reject that that was a cruel observation. Rather, while perhaps bluntly expressed, that was simply what Mr Chung thought to be the most plausible explanation for Mr Roohizadegan’s statement. In common with everyone else with whom Mr Roohizadegan had worked at TechnologyOne, Mr Chung had been given no reason to suspect that Mr Roohizadegan did not enjoy robust mental health. It is only in retrospect that it seems so.
Sustaining his workplace as a place of safety where he could escape his otherwise incapacitating depression required Mr Roohizadegan not only to hide any symptoms of overt distress from his employer, but also to remain highly functioning in a demanding role. I am satisfied that to a very significant degree Mr Roohizadegan accomplished both of those objects.
I accept however that it is implausible that Mr Roohizadegan could have been capable of hermetically sealing off his work-life from the impact of his distress. Dr White, a psychiatrist, examined Mr Roohizadegan on 4 November 2015 in connection with other legal proceedings that he and his daughter were then bringing in which each had claimed damages on the basis that certain medical practitioners who were alleged to have misdiagnosed her had been negligent. Dr White recorded Mr Roohizadegan telling him:
They [TechnologyOne] don’t know about my suicidal tendencies but I’ve been told in the past four years that I could have done better. I haven’t been performance managed yet but I have to work longer hours because I get absolutely distracted about my daughter. I’m not efficient. Severe concentration problems. I forget things and I send the wrong emails to people, repeatedly getting into trouble with my boss because I misjudge situations.
Although Dr White’s note appears from its dating to have been made from memory a few days after his in person consultation, I accept that Mr Roohizadegan expressed himself to Dr White substantially to that effect.
However, two things are to be observed about what Mr Roohizadegan reported to Dr White. First, to the extent that Mr Roohizadegan told Dr White that he had suffered a deficit in concentration there is unchallenged evidence that he had adopted adaptive strategies in that regard such as working longer hours and making notes. As I have earlier noted, those strategies were demonstrably successful in achieving their object of compensating for those deficits: at least insofar as Mr Roohizadegan continued to be regarded as an outstanding performer (see below at [40]-[45]). It was for that reason that his work colleagues never recognised him to have suffered a psychiatric illness or injury.
Second, while it can be accepted that Mr Roohizadegan told Dr White about his getting into trouble with his then boss (being Mr Martin Harwood) Mr Roohizadegan was then unaware of certain matters as have emerged in this proceeding. The evidence that has emerged as to Mr Harwood’s conduct and motivations suggests there may be an alternative explanation for Mr Roohizadegan having found himself “in trouble” with his boss: see below at [302]-[331].
Mr Roohizadegan’s performance at work does not materially decline notwithstanding his (later diagnosed) depressive disorder
I do not understand the Respondents to ask the Court to find that Mr Roohizadegan’s long established, and only later diagnosed, depressive disorder caused a material decline in his performance at work. In any event, I am satisfied that it did not.
It is uncontentious that Mr Roohizadegan’s condition first manifested itself in late 2010, after his daughter had become ill.
Mr Roohizadegan’s receipt of the TechnologyOne Chairman’s Award in each of 2012, 2013 and 2014 is entirely inconsistent with his work performance having fallen off. It is equally inconsistent with Mr Roohizadegan having been granted share options in 2013 and early 2015, after he had complained to Mr Di Marco that his performance should entitle him to an equity interest in the company. Mr Roohizadegan was not the passive recipient of TechnologyOne’s general largess. He was always astute to ensure that his contribution to the success of TechnologyOne be acknowledged in hard economic terms. Indeed, in his evidence-in-chief Mr Di Marco describes Mr Roohizadegan as having been a constant complainer:
Behnam complained from the day he started at TechnologyOne. He complained from day one that the salary that we had offered him and that he had agreed was not enough and I had to change it. He complained about options. He complained about staff. He complained so much. You will see it through all the papers, and the last three or four months … I couldn’t care less about a complaint. All I cared about is his ability to perform, number 1, and number 2, that his behaviours were acceptable. But his complaints were totally irrelevant to the whole thing. And if Behnam had been the right person, he would still be there.
As Mr Di Marco’s evidence implies, I am entitled to be satisfied that had Mr Roohizadegan not been a strong performer he would have been given very short shrift. Instead, I infer that Mr Di Marco yielded to Mr Roohizadegan’s demands for additional financial rewards because he was a strong performer whose services he wished to retain.
The evidence also is clear that Mr Di Marco put up with Mr Roohizadegan’s practice of bypassing his direct reports to raise any concerns he had that touched on the success of the Victorian region directly with him. Mr Di Marco’s affidavit evidence on this point was as follows:
Behnam never reported directly to me, but always to one of the managers referred to in the paragraph above. Notwithstanding this, Behnam frequently emailed me about a range of issues, and when he was in Brisbane, he would often ask to speak with me. I would agree to see Behnam when he was in Brisbane as I thought he was working hard to grow TechnologyOne's business in Victoria. Behnam escalated lots of things to me, more than any other State Manager. I did not encourage him to do this, and as time went by, it became a major concern to me how often he was escalating matters to me which should have been discussed and addressed with his manager. (Ex R31, [10]).
I discount Mr Di Marco’s evidence to the extent that it might suggest that he had sought to counsel Mr Roohizadegan not to raise matters directly with him. Mr Di Marco accepted that Mr Roohizadegan had expressed appreciation of his willingness to meet him one on one whenever he came to Brisbane (T613, lines 3-4). There is no evidence before me as would entitle me to find that Mr Di Marco ever disabused Mr Roohizadegan of his understanding that his conduct in escalating his concerns was appropriate. I conclude that Mr Di Marco’s willingness to have routinely allowed Mr Roohizadegan direct access to him was because he had accepted that Mr Roohizadegan was, and remained until his dismissal, significantly responsible for TechnologyOne’s sales growth and increased profits in Victoria: a large and important part of its national market.
The core of Mr Roohizadegan’s dismissal case
Putting aside Mr Roohizadegan’s contractual claim, this proceeding thus turns on why, notwithstanding their prior mutually beneficial history, in 2016 TechnologyOne decided to terminate Mr Roohizadegan’s employment. In closing submissions his senior counsel, Mr Tracey (junior counsel being Mr Minson), abandoned reliance on Mr Roohizadegan’s pleadings insofar as they assert breaches of the Fair Work Act by TechnologyOne unrelated to Mr Roohizadegan’s dismissal (T1214, lines 26-31, 39-47).
Mr Roohizadegan’s case therefore is confined to the claim that he was dismissed for the following prohibited reasons, contrary to s 340 of the Fair Work Act:
·Seven instances of his exercising his workplace rights by making complaints in relation to his employment: in particular, complaints as to his having been bullied;
·His proposed exercise of his right to bring legal proceedings under a workplace law;
·His proposed exercise of a safety net contractual entitlement; and
·His having a safety net contractual entitlement.
I note in that regard that in closing submissions Mr Tracey also indicated that the Applicant did not press pleaded claims that he had been dismissed for other reasons (being his taking sick leave; being temporarily absent from work; and having a mental disability) (T1217, lines 15-39).
Mr Roohizadegan’s evidence is that as a result of his dismissal he suffered a profound mental breakdown. Whether his dismissal caused that breakdown, or whether it was merely a manifestation of his earlier depressive disorder from which he had continued to suffer after his daughter’s illness, is the subject of contested expert evidence to be discussed later. It is however not in dispute that after he was dismissed Mr Roohizadegan became, and remains, incapable of ever working again.
The relevant statutory provisions upon which Mr Roohizadegan’s claims are based are those provided for in ss 340 and 341 of the Fair Work Act as follows:
340 Protection
(1) A person must not take adverse action against another person:
(a) because the other person:
(i) has a workplace right; or
(ii) has, or has not, exercised a workplace right; or
(iii) proposes or proposes not to, or has at any time proposed or proposed not to, exercise a workplace right; or
(b) to prevent the exercise of a workplace right by the other person.
Note: This subsection is a civil remedy provision (see Part 4‑1).
(2) A person must not take adverse action against another person (the second person) because a third person has exercised, or proposes or has at any time proposed to exercise, a workplace right for the second person’s benefit, or for the benefit of a class of persons to which the second person belongs.
341 Meaning of workplace right
(1) A person has a workplace right if the person:
(a)is entitled to the benefit of, or has a role or responsibility under, a workplace law, workplace instrument or order made by an industrial body; or
(b) is able to initiate, or participate in, a process or proceedings under a workplace law or workplace instrument; or
(c) is able to make a complaint or inquiry:
(i)to a person or body having the capacity under a workplace law to seek compliance with that law or a workplace instrument; or
(ii)if the person is an employee—in relation to his or her employment.
Insofar as there are multiple reasons for the taking of adverse action, s 360 provides:
360 Multiple reasons for action
For the purposes of this Part, a person takes action for a particular reason if the reasons for the action include that reason.
In his Further Amended Statement of Claim Mr Roohizadegan pleads that he made seven complaints in relation to his employment, and that these were individually or severally the reason for his dismissal or were included as a reason for that action. Mr Tracey submits that Mr Roohizadegan was able make those complaints “in relation to his employment” pursuant to TechnologyOne’s “Open Door Policy” (Ex A32, CB 3553-33554) and its “Workplace Bullying Policy” (Ex A80).
Assuming the Court finds that Mr Roohizadegan did make those complaints, I do not take Dr Spry to submit that he was not “able” to make them “in relation to his…employment”.
That concession is appropriate. I will be brief in explaining why I accept that to be the case, because I do not take the conclusion to be in issue.
Mr Roohizadegan’s contract of employment referred to TechnologyOne’s policies and procedures as setting out the company’s expectations of how its employees were to conduct themselves. Clause 13 of his contract relevantly provided as follows:
13.1To help our business operate lawfully, safely and efficiently, we have policies and procedures, which set out how all employees are to conduct themselves and processes, which are to be followed. You will be expected to follow these policies and procedures current at the time. Our company wide policies and procedures can be accessed on our intranet. It is incumbent on you to be familiar with all our policies and procedures. Serious breaches of our policies and procedures current at the time could result in termination of your employment.
13.2To meet the changing environment in which we operate, it will be necessary to change these policies and procedures from time to time. You will be given notice of the changes and will be required to follow the change policies and procedures.
I am satisfied that TechnologyOne’s “Open Door Policy” and its “Workplace Bullying Policy” (as are in evidence as exhibits A32 and A80) are not disputed to have been applicable at the relevant time. They provide an explicit basis for the Court to be satisfied that Mr Roohizadegan was “able to make a complaint” as he claims he did, inter-alia, about his having been bullied in relation to his employment.
Having regard to the terms of Mr Roohizadegan’s contract and those policies, I am satisfied Mr Roohizadegan had the entitlement upon which he relies. My conclusion in that regard is consistent with the reasoning of Dodds-Streeton J in Shea v TRUenergy Pty Ltd (No 6) [2014] FCA 271 at [640].
I am satisfied for those reasons that Mr Roohizadegan possessed and was capable of exercising a relevant “workplace right”.
He was accordingly protected by s 341(1)(c)(ii) against adverse action being taken against him for the reason that he had made a complaint in relation to his employment.
The same applies with respect to any complaint Mr Roohizadegan made in good faith regarding his contractual entitlements. In that regard I respectfully adopt the reasoning of Rangiah and Charlesworth JJ in PIA Mortgage Services Pty Ltd v King [2020] FCAFC 15 at [19]-[20]:
Under the general law, an employee has a right to sue his or her employer for an alleged breach of the contract of employment. A suit may be regarded as the ultimate form of complaint. Accordingly, in our opinion, an employee is “able to make a complaint” about his or her employer’s alleged breach of the contract of employment. That ability is “underpinned by” (to use Dodds-Streeton J’s expression in Shea) the right to sue, and extends to making a verbal or written complaint to the employer about an alleged breach of the contract.
Further, an employee who alleges that his or her employer has contravened a statutory provision relating to the employment is “able to make a complaint” within s 341(1)(c)(ii) of the FW Act. That right or entitlement derives from the statutory provision alleged to have been contravened. The ability encompasses making a complaint to the employer or an appropriate authority about the alleged contravention, whether or not the statute directly provides a right to sue or make a complaint.
Again, I do not apprehend the Respondents to take issue with that proposition.
I further take the Respondents to accept that, to the extent that Mr Roohizadegan did exercise a workplace right by complaining inter-alia about his being bullied by one or more other employees of TechnologyOne or about his safety net contractual entitlements, the presumption provided for by s 361(1) of the FWA applies in these proceedings. In any event, for the reasons that follow I so find.
The statutory presumption and the Respondents’ case
The terms of s 361 of the Fair Work act are as follows:
361 Reason for action to be presumed unless proved otherwise
(1) If:
(a) in an application in relation to a contravention of this Part, it is alleged that a person took, or is taking, action for a particular reason or with a particular intent; and
(b) taking that action for that reason or with that intent would constitute a contravention of this Part;
it is presumed that the action was, or is being, taken for that reason or with that intent, unless the person proves otherwise.
(2)Subsection (1) does not apply in relation to orders for an interim injunction.
In Board of Bendigo Regional Institute of Technical and Further Education v Barclay [2012] HCA 32; 248 CLR 500 (Barclay) at [50] French CJ and Crennan J - while acknowledging that Mason J’s remarks had been directed to an earlier expression of the statutory presumption - adopted as applicable to its current expression his Honour’s observation in General Motors-Holden's Pty Ltd v Bowling (1976) 51 ALJR 235 at 241; 12 ALR 605 (Bowling) at 617 that:
the plain purpose of the provision [is to throw] on to the defendant the onus of proving that which lies peculiarly within his own knowledge.
That understanding of the purpose of the provision has been repeatedly reaffirmed: see, for example, AustralianBuilding and Construction Commissioner v CoreStaff WA Pty Ltd [2020] FCA 893 per Banks-Smith J at [12].
In respect of the pleaded allegation that Mr Roohizadegan was dismissed for the reason that, or reasons including that, he had exercised his workplace rights, TechnologyOne thus has the burden of displacing the statutory presumption provided for by s 361(1): assuming the Court finds that he did make the complaints he alleges to persons with authority to address those complaints within TechnologyOne.
The Respondents’ case is that Mr Di Marco was the sole decision-maker with respect to Mr Roohizadegan’s dismissal.
The Respondents do not suggest that Mr Roohizadegan’s dismissal was not relevantly the taking of “adverse action”. They simply contend that Mr Roohizadegan’s dismissal was for different reasons to those alleged by Mr Roohizadegan. It had nothing to do with his having exercised any workplace right.
If “adverse action” is taken as a result of a decision that has been made by an individual within a corporation, the identification of the reasons for the corporation taking the adverse action requires an inquiry focussed on the actual mental processes of the relevant individual who made that decision: Barclay at [140] (Heydon J); Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd [2014] HCA 41; 253 CLR 243 (BHP Coal) at [7] (French CJ and Kiefel J), [85] (Gageler J).
Barclay establishes that an employer will not be liable for a breach of the Fair Work Act simply because he or she has dismissed an employee in awareness that that employee has exercised a protected workplace right. An employer contravenes the Fair Work Act, and liability is imposed, only if their employee’s exercise of that right was the reason or part of the reason for their having taken that adverse action. A court is therefore required to make findings regarding the decision maker’s actual reasons. What those reasons are is to be determined from all of the facts established in the proceeding, and inferences properly drawn from them.
Section 361 however requires the Court to conclude that the reason the employee has alleged was his or her employer’s reason for taking adverse action against him or her was in fact the reason for that action, unless the employer can establish that the adverse action was not taken for that alleged prohibited reason. Proof in that regard is on the balance of probabilities: Barclay at [56] per French CJ and Crennan J, citing Gibbs J in Bowling at 239.
In State of Victoria (Office of Public Prosecution) v Grant [2014] FCAFC 184; 246 IR 441 at [32], Tracey and Buchanan JJ summarised (in terms which I respectfully adopt) the following propositions as having been established by Barclay:
•The question is one of fact. It is: “Why was the adverse action taken?”
•That question is to be answered having regard to all the facts established in the proceeding.
•The Court is concerned to determine the actual reason or reasons which motivated the decision-maker. The Court is not required to determine whether some proscribed reason had subconsciously influenced the decision-maker. Nor should such an enquiry be made.
•It will be “extremely difficult to displace the statutory presumption in s 361 if no direct testimony is given by the decision-maker acting on behalf of the employer.”
•Even if the decision-maker gives evidence that he or she acted solely for non-proscribed reasons other evidence (including contradictory evidence given by the decision-maker) may render such assertions unreliable.
•If, however, the decision-maker’s testimony is accepted as reliable it will be capable of discharging the burden imposed on the employer by s 361.
In BHP Coal at [93] Gageler J held that to escape liability, having regard to the presumption, an employer must “prove that the act or omission having the character of a protected industrial activity [as was relevant in that instance] played no operative part in its decision”.
However, in Australian Building and Construction Commissioner v Hall [2018] FCAFC 83; 261 FCR 347 a Full Court of this Court held at [100]:
The orthodox approach to dealing with allegations of adverse action said to be engaged in “because” of a particular circumstance requires the party making such an allegation to establish the existence of the circumstance as an objective fact. If an applicant, on the whole of the evidence, establishes, to the Briginshaw standard, that the elements of a particular contravention (other than the reasons for the respondent taking action) exist and if the respondent wishes to avoid an adverse finding in respect of the alleged contravention the respondent will bear the onus to establish, on the balance of probabilities, that he or she had not acted for any proscribed reason. As has already been noted above … s 360 contemplates that there might be multiple reasons for a respondent taking action to the prejudice of the applicant. A reason will not be proscribed unless it is “a substantial and operative factor” in the respondents' reasons for taking the adverse action (citing Barclay at [62] (French CJ and Crennan J) and [104] (Gummow and Hayne JJ)).
(Citations omitted except where expressly set out).
Although I remain challenged to understand how the conclusion stated in the final sentence of that passage can be reconciled with the operation of the statutory presumption, my failure in that regard is of no consequence; the outcome that the Full Court reached, which their Honours expressed as being required by Barclay, is binding on me. I thus proceed on the basis that if the Respondents establish on the balance of probabilities that Mr Roohizadegan’s pleaded instances of exercising his workplace rights (assuming the Court finds they were made) were not individually or collectively a “substantial and operative” reason for his termination then even if those pleaded instances were a factor or factors in his employer’s decision to dismiss him Mr Roohizadegan will fail to make good his case that he was terminated from his employment for a prohibited reason.
In the present case, the Respondents submit that the evidence entitles the Court to conclude that Mr Di Marco was the sole decision maker responsible for Mr Roohizadegan’s termination. On their behalf Dr Spry submits that the Court should accept Mr Di Marco’s evidence that he dismissed Mr Roohizadegan exclusively for the following reasons:
(1)The licence fees in the Victorian region (for which Mr Roohizadegan was responsible) were not growing;
(2)Concerns had been raised by Mr Roohizadegan’s team, which was a “team in crisis”; and
(3)Mr Roohizadegan had been unable to work well with three different managers within a two-year period (T594-596).
Dr Spry submits that the Court should accept Mr Di Marco’s evidence that none of the complaints as the Court might find Mr Roohizadegan to have made, whether about bullying or his contractual entitlements, played any part in TechnologyOne’s decision to dismiss him.
For reasons that I will later explain I accept the Respondents’ submission that Mr Di Marco was, ultimately, the sole decision maker in respect of Mr Roohizadegan’s dismissal.
However, for the reasons I further give I reject the proposition that I am entitled to conclude on the balance of probabilities that his termination was not for the reasons he alleges or did not include those reasons.
More specifically I am unpersuaded the Respondents prove, on the balance of probabilities, that Mr Roohizadegan’s complaints about having been bullied, inter-alia by his two most recent direct reports, Mr Martin Harwood and Mr Stuart MacDonald, were not a substantial and operative reason for Mr Di Marco’s decision to terminate Mr Roohizadegan’s employment.
Accordingly I have concluded that Mr Roohizadegan is entitled to rely on the presumption provided for by s 361 of the Fair Work Act.
Dramatis personae
Before turning to my reasons for reaching those conclusions, I should identify the key dramatis personae and their roles at TechnologyOne during the period material to these proceedings. Doing so will allow reference to be made to those individuals in these reasons without extensive explication:
Mr Benham Roohizadegan
The Applicant, employed from 3 July 2006 as State Manager for Victoria and later as Regional General Manager (incorporating Tasmania) from February 2015 until 18 May 2016, based in Melbourne.
Mr Adrian Di Marco
The Second Respondent, Executive Chairman and Chief Executive Officer at TechnologyOne, based in Brisbane.
Mr Di Marco stood down from the role of CEO on 23 May 2017.
Mr Boris Ivancic
Employed at TechnologyOne as Regional Sales Manager for the Victorian Region from February 2016 to January 2017. Appointed in a caretaker role as Regional Manager reporting to Mr MacDonald after Mr Roohizadegan’s termination.
Mr Lee Thompson
Employed as Operating Officer, Sales and Marketing at TechnologyOne from January 2014 to October 2014. Mr Roohizadegan’s direct report for that period.
Mr Martin Harwood
Employed as Operating Officer, Sales and Marketing at TechnologyOne from late 2014 to 11 April 2016. Mr Roohizadegan’s direct report for that period. For a period thereafter he shares responsibility for that role with Mr Stuart MacDonald.
Mr Stuart MacDonald
Employed as Operating Officer, Sales and Marketing at TechnologyOne from 11 April 2016 to 23 May 2017. Mr Roohizadegan’s direct report, until the latter is summarily dismissed by TechnologyOne.
Ms Rebecca Gibbons
Employed at TechnologyOne from August 2011 to May 2017 as HR Business Partner responsible for sales, marketing, corporate services, products and solutions.
Ms Kathryn Carr
Employed at TechnologyOne, initially as HR specialist from 16 May 2011 and then in the role of HR Director in the two years prior to her resignation on 31 March 2017.
Mr Edward Chung
Employed at TechnologyOne as Chief Operating Officer from February 2016 to 22 May 2017, and for 16 months prior to that as Operating Officer Products and Solutions, and prior to this appointment Operating Officer Corporate Services and Chief Financial Officer.
Currently employed by TechnologyOne as its Chief Executive Officer. Appointed to that role on 23 May 2017, replacing Mr Di Marco.
Mr Richard Metcalfe
Employed at TechnologyOne for approximately nine years as State Manager, Sales and Marketing for Tasmania. Appointed by Mr Harwood on 16 March 2015 also to serve as Regional Sales Manager for Victoria. His appointment in that respect is terminated on 8 February 2016.
Mr Peter Sutching
Employed at TechnologyOne as Products and Local Government General Manager: a position of equivalent seniority within TechnologyOne to that of Mr Roohizadegan.
Chronology
To allow the Court to focus its reasons on the core issues in dispute without the need for prolix background, I will now set out a chronology of events. In the majority of instances there is no significant dispute as between the parties that the events recorded in this chronology occurred. Subject to further explication in these reasons and to the qualification below, what is stated in the chronology serves as the Court’s findings.
Where the chronology refers to an event in dispute as between the parties, it is qualified by being identified as a “claim”. The matters so identified are not findings. They are recorded so that the events in dispute, to be the subject of later discussion, can be placed within their historical context.
The chronology also identifies in bold text when the bullying complaints on which Mr Roohizadegan relies as the relevant exercise of his workplace rights are alleged to have occurred. It similarly identifies in bold text the occasion when, on the Respondents’ case as advanced, Mr Di Marco made his decision to terminate Mr Roohizadegan’s employment.
Mid 2006
Mr Roohizadegan has one or more pre-employment interviews with Mr Di Marco (Ex A6, CB131-132).
3 July 2006
Mr Roohizadegan commences employment at TechnologyOne in the position of State Manager Victoria (Ex A6, CB131). His contract provides that his remuneration is to include a base salary package plus an incentive bonus “based upon Profit Before Tax (PBT) performance” to be “constituted from an agreed percentage of the Region’s PBT performance” (Ex A30, CB559).
20 October 2006
Mr Roohizadegan has a post-placement review. He raises concerns regarding not being entitled to share options (Ex A30, CB608-613).
6 December 2006, 15 December 2006, 19 January 2007
Mr Roohizadegan discusses his remuneration with Mr Di Marco. He requests share options in telephone conversations and sends follow-up emails (Ex A6, CB133; Ex A30, CB627-632).
7 March 2007
Mr Roohizadegan’s contract of employment is varied to increase his incentive payments (Ex A30, CB703-704).
In or around 9 November 2009
Mr Roohizadegan meets Mr Harwood, Mr Phare, and Mr Di Marco on the Gold Coast. Mr Roohizadegan claims that his entitlement to receive commissions for sales of the company’s Student Management Services (SMS) product is discussed. He claims that thereafter he “continued to make regular enquiries” regarding his incentive payments with TechnologyOne’s Executive Team (Ex A6, CB141-143).
26 November 2009
Mr Roohizadegan’s contract of employment is varied. As varied, it refers to his being entitled to an incentive based on “Profit Before Tax (PBT) performance for Business Unit 03 – Victoria – Service Delivery”. Increased rates of incentive for the future years are agreed (Ex A30, CB872-876).
17 June 2010
Mr Roohizadegan meets Mr Speed, Mr Phare, Mr Harwood and Mr Di Marco (Ex A6, CB142; Ex A30, CB938). Mr Roohizadegan claims his entitlement to revenue from SMS is discussed. Emails are sent to follow up (Ex A6, CB142; Ex A30, CB939-940).
September 2010
Mr Roohizadegan’s daughter falls ill (T161).
November 2010
Mr Roohizadegan advises TechnologyOne of his daughter’s illness (Ex A9, CB1084-1088).
January 2011
Mr Roohizadegan’s daughter undergoes open heart surgery (T161).
8 April 2011
Mr Pye emails Mr Roohizadegan information regarding TechnologyOne’s commission policy. Mr Roohizadegan makes a handwritten note on a printed copy of that email. His note is: “Where is SMS?! Regional P&L?? told to wait … Year End!” (Ex A37, CB1173).
29 April 2011
Mr Roohizadegan emails Mr Pye regarding his concerns relating to his entitlement to incentives on SMS revenue (Ex A6, CB142; Ex A30, CB3027).
23 April 2012
Mr Roohizadegan claims that Mr Di Marco becomes angry with Mr Harwood after Mr Roohizadegan complains to him about Mr Harwood interfering in his business by stopping the termination of an underperforming employee (T169, lines 10-22).
24-25 April 2013
Mr Roohizadegan sends an email to Mr Di Marco requesting approval for share options to be granted to him without time restrictions. Mr Di Marco emails Mr Chung asking him to make arrangements (Ex A30, CB3519-3520).
August-September 2013
Mr Chung sends a letter to Mr Roohizadegan making an offer to him of share options (Ex A30, CB3567-3571). Further offers are made in 2014 and 2015 (Ex A30, CB3899-3906).
29-30 September 2013
Email and telephone correspondence is exchanged between Mr Roohizadegan and Mr Di Marco concerning share options (Ex A6, CB134; Ex A30, CB3597-3598).
February-October 2014
Mr Thompson becomes Mr Roohizadegan’s manager. Mr Thompson (twice) gives Mr Roohizadegan an “A rating” for his performance pursuant to TechnologyOne’s “Leaders Guide: ABC Ratings” performance assessment system based on performance against quota (T457; Ex A14, CB9636).
April 2014
Mr Roohizadegan and Mr Harwood come into conflict regarding Mr Roohizadegan’s decision to escalate a customer complaint from Warrnambool Shire Council to Mr Di Marco. Emails are exchanged in that regard (Ex A30, CB3765-3733).
October 2014
Mr Harwood is appointed as TechnologyOne’s Operating Officer for Sales and Marketing. He replaces Mr Thompson as Mr Roohizadegan’s direct report (Ex R65, CB473).
January 2015
Mr Roohizadegan receives an email from Mr Pye advising him that he has been granted additional share options (Ex A6, CB134; Ex A30, CB4112-4113).
February 2015
Mr Roohizadegan is promoted by TechnologyOne from the position of State Manager for Victoria to the position of Regional General Manager. The terms of his contract of employment are otherwise unaltered (Ex A30, CB4155-4156).
March 2015
Mr Harwood appoints Mr Metcalfe to the position of Regional Sales Manager for Victoria, ostensibly to assist Mr Roohizadegan to manage his increased responsibilities.
Mr Roohizadegan claims that he is not consulted by Mr Harwood about Mr Metcalfe’s appointment or his suitability for that position (T177-187).
Mr Metcalfe reports not only to Mr Roohizadegan but also to Mr Harwood (T889).
16-17 June 2015
Ms Carr receives a complaint about Mr Roohizadegan’s approach to interviewing a candidate for employment, Ms Breen. Ms Carr copies that email to Mr Di Marco, who asks Mr Roohizadegan about his alleged behaviour. Mr Roohizadegan responds to explain his conduct (Ex R22, CB4246-4251).
15 June 2015
Mr Roohizadegan is made aware of a decision by Mr Metcalfe and Mr Harwood to terminate the employment of Mr Con Tsalkos. He claims that it had been his prior understanding that Mr Tsalkos was to be placed on a performance management plan (Ex A6, CB154-155).
18 June 2015
Mr Roohizadegan emails Mr Harwood, cc’ing Mr Di Marco, questioning Mr Harwood’s reasons for terminating Mr Tsalkos. He claims in his email that Mr Harwood had made that decision without any involvement on his part. He complains that he “cannot run [his] region in parallel with a fifth column” (Ex R12, CB4274-4275).
26 June 2015
Mr Di Marco responds to Mr Roohizadegan’s email of 18 June 2015. He states that he has “recruiters telling [him] they will not put good sales staff to us in Victoria” He informs Mr Harwood “the revolving door has to stop” and that he is holding him accountable (Ex R13, CB4304).
5 September 2015
Ms Carr begins to prepare a script and communication plan for Mr Roohizadegan’s termination based on conversations she had at that time with Mr Harwood (Ex R61, CB462-463; Ex R62, CB4349-4353). The reason(s) for that plan coming to nothing are not before the Court.
12 January 2016
Mr Harwood emails Mr Roohizadegan and Mr Metcalfe regarding their sales forecasts for Victoria, stating that the region “cannot go backwards for the fourth year in a row” (Ex R8, CB4677). Mr Roohizadegan replies, challenging the factual premise of Mr Harwood’s email (Ex R9, CB4763-4765).
13 January 2016
Mr Harwood emails Mr Roohizadegan (cc’ing Mr Di Marco) with respect to their email exchanges of the previous day. He says “this stuff can wait until you are feeling better and we can get together to figure out how we fix the problem” (Ex R16, CB4682).
20 January 2016
Mr Di Marco asks to meet Mr Harwood to discuss the issues arising out of Mr Harwood’s 12-13 January 2016 emails. Mr Harwood advises Mr Di Marco, inter-alia, that in his view Mr Roohizadegan has “lost his mojo”, and that if the situation does not improve he will “have to go” (Ex R33, CB4722).
21 January 2016
Mr Harwood rejects Mr Roohizadegan’s preferred candidate as the replacement for Mr Metcalfe as Regional Sales Manager for Victoria (T178-179; Ex A6, CB155-156). Mr Harwood and Mr Roohizadegan then agree that Mr Ivancic should be appointed to fill that role.
28 January 2016
Emails are exchanged between Mr Roohizadegan and Mr Harwood as to whether or not Mr Ivancic should be paid a guaranteed commission (Ex R18, CB4941-4946).
Mr Roohizadegan requests a meeting with Mr Di Marco to discuss not only that issue but also the performance of the Victorian region more generally. Mr Di Marco schedules a meeting with Mr Roohizadegan for 3 February 2016 (Ex A6, CB156; Ex A30, CB4871-4887, CB4812-4820, CB4839-4842).
1 February 2016
Mr Roohizadegan claims that Mr Harwood demands of him that he cancel his scheduled meeting with Mr Di Marco (Ex A11).
2 February 2016
Mr Roohizadegan claims Mr Harwood threatens him that if he does not cancel his meeting with Mr Di Marco, one of them will have to go (Ex A11).
3 February 2016
Mr Roohizadegan meets with Mr Di Marco in Brisbane (Ex A12, CB4938).
Mr Roohizadegan claims that he complained to Mr Di Marco about Mr Harwood having undermined him in his role in managing the Victorian region. He claims he informed Mr Di Marco that Mr Harwood had threatened him that if he did not cancel the meeting he had scheduled with Mr Di Marco, then one of them would have to go (T176, line 41-T177, line 14).
Mr Roohizadegan pleads (at paragraph [9] of his Further Amended Statement of Claim) that his doing so was an exercise of his workplace right to make a complaint in relation to his employment.
Mr Roohizadegan claims that Mr Di Marco then brought Mr Harwood into the meeting. He claims that Mr Di Marco told both of them that he thought the world of each of them (T117, lines 9-33). Mr Roohizadegan claims that after the meeting had concluded, Mr Di Marco spoke to him in private. He claims Mr Di Marco reassured him that he was doing nothing wrong (T180, lines 39-42). He claims Mr Di Marco explained that he had had to show Mr Harwood that he needed him as well (T180, lines 33-36). He claims Mr Di Marco asked him to build a relationship with Mr Harwood.
Mr Roohizadegan claims that when after their meeting he later had seen Mr Harwood, Mr Harwood had threatened to “scrutinise” him until he left TechnologyOne. He claims Mr Harwood said to him words to the effect that while Mr Roohizadegan may have won a battle, he would win the war (T182, lines 4-9).
February 2016
Mr Ivancic replaces Mr Metcalfe in the position of Regional Sales Manager for Victoria (Ex A5, CB223).
11 February 2016
Ms Marie Phillips informs Mr Roohizadegan that he will not be permitted to attend the LG Professionals Conference run by TechnologyOne as he had routinely attended for many years previously (Ex A6, CB162).
24 February 2016
Ms Carr emails Mr Roohizadegan, cc’ing Mr Harwood, regarding a negative review about Mr Roohizadegan’s interviewing style that had appeared in “Seek”. Mr Roohizadegan responds to Ms Carr denying any impropriety (Ex R61, CB462; Ex R62, CB5015-5016).
31 March 2016
There are communications between Mr Roohizadegan and Ms Phillips regarding her having directed him not to attend the LG Professionals Conference. Those emails are later forwarded to Mr MacDonald in April, after his appointment (Ex A30, CB5491-5498).
11 April 2016
Mr MacDonald replaces Mr Harwood in the position of Operating Officer for Sales and Marketing. In that capacity Mr MacDonald becomes Mr Roohizadegan’s direct manager. Mr Harwood remains jointly responsible in that capacity for an initial overlap period. The length of the overlap period is in dispute, but extends to at least 27 April 2016 (T193, T362-363, T971, T1109).
12 April 2016
Mr Roohizadegan complains to Mr Pye about Mr MacDonald interfering with one of his responsibilities, being the management of relations with the Bass Coast Shire Council (a potential TechnologyOne customer in Victoria) (Ex A6, CB152; Ex A30, CB5749-5755).
13 April 2016
Mr MacDonald (in a phone conference in which Mr Harwood also participates) tells Mr Roohizadegan to not attend a demonstration by TechnologyOne to the Bass Coast Shire Council (Ex A6, CB163-164; Ex R56, CB438-439).
Mr Roohizadegan expresses concern regarding that instruction in an email sent to Mr Macdonald, Mr Harwood and Mr Di Marco. Mr Roohizadegan also complains in his email that Ms Phillips and Mr Peter Sutching are marginalising him (Ex R19, CB5355-5356).
14 April 2016
The Bass Coast Shire demonstration takes place. As instructed, Mr Roohizadegan does not attend (Ex R47, CB5421-5427). TechnologyOne’s presentation is undertaken by Mr Dugina.
18-19 April 2016
Ms Gibbons visits TechnologyOne’s Melbourne offices.
Ms Gibbons has a series of meetings (claimed by her to be unscheduled and unplanned) with a number of TechnologyOne’s Victorian sales staff. All of those meetings take place outside the company’s Melbourne offices. Several of the sales staff with whom she meets make complaints about Mr Roohizadegan. Ms Gibbons takes no notes during those conversations (T715-716).
20 April 2016
Ms Gibbons meets with Mr Roohizadegan. Ms Gibbons does not inform him that he has been the subject of complaints by some members of TechnologyOne’s Victorian sales team.
Mr Roohizadegan tells Ms Gibbons that he is being marginalised by, inter-alia, Ms Phillips and Mr Sutching (T183-184; T725). Mr Roohizadegan claims that Mr Gibbons agrees that Mr Sutching’s conduct amounts to bullying (T184; T725). Mr Roohizadegan tells Ms Gibbons he is considering taking legal action (T184).
Mr Roohizadegan pleads (at paragraph [18A] of his Further Amended Statement of Claim) that this was a second instance of his exercising his workplace right to make a complaint in relation to his employment.
Following their meeting Ms Gibbons sends Mr Roohizadegan an email including a link to TechnologyOne’s bullying policy (T726; Ex A80).
Mr Roohizadegan then sends an email to Mr MacDonald expressing concern that Ms Phillips and Mr Sutching are preventing him from doing his job (Ex A30, CB5491-5498). He receives no response (Ex A6, CB163).
21 April 2016
Ms Gibbons sends two emails to Mr MacDonald. The first of Ms Gibbons’ emails attaches a “breakdown of profit, inc licence fees, consulting etc for each region”. The second provides him with her advice regarding Mr Roohizadegan’s earnings since FY13. She reports to Mr MacDonald that “whilst profit has increased, the licence fees in the region have decreased.” Ms Gibbons attaches Mr Roohizadegan’s resume to her second email (Ex A65, CB5558-5568; Ex A66, CB5569-5570).
22 April 2016
Mr Roohizadegan refers to a forthcoming meeting with Melbourne University he is planning to attend. Mr MacDonald responds that he thought only he and Mr Harwood would be taking that meeting and that he would “prefer if in the future we follow my direction” (Ex A6, CB166; Ex A30, CB5656-5661).
24 April 2016
Ms Gibbons sends an email to Ms Carr to inform her about the complaints made against Mr Roohizadegan by the sales staff of TechnologyOne with whom she had met in Melbourne over the period of 18-20 April 2016. Ms Gibbons’ email also explains that Mr Roohizadegan had told her he was considering making a bullying claim and taking legal action against Peter Sutching (Ex R41, CB431; Ex R42, CB5576-5577).
25 April 2016
Ms Carr forwards Ms Gibbons’ email of 24 April 2016 to Mr Di Marco, copying in Mr Chung and Mr Harwood (Ex R62, CB5584). She then forwards it to Mr MacDonald (Ex R58, CB5595).
Mr Di Marco claims he was “flabbergasted” upon receiving that email (T518). His evidence is that it was one of the worst emails he had received in business in 35 years (T518) and that upon reading it he had decided that Mr Roohizadegan had to go (T519).
On the Respondent’s case (Respondents’ Closing Submissions paragraph [135]) Mr Di Marco decided to dismiss Mr Roohizadegan from his employment with TechnologyOne at this time.
Mr Di Marco requests that Ms Carr set up a meeting of TechnologyOne’s Executive Team to discuss Ms Gibbons’ email (Ex R58, CB5595-5597). She does so. Mr MacDonald emails Ms Carr in response asking whether they can meet beforehand to “sync our message” (Ex R58, CB5595).
Mr Roohizadegan sends an email to Mr MacDonald querying why he has been instructed not to attend his meeting with Melbourne University. His email complains about being bullied. He asks “I need to understand what my job is please” (Ex R21, CB5673-5697).
Mr Roohizadegan pleads (at paragraph [25] of his Further Amended Statement of Claim) that this is the third instance of his exercising his workplace right to make a complaint in relation to his employment.
Mr Roohizadegan emails Mr Di Marco to complain about decisions being made behind his back. He tells Mr Di Marco about the instruction he has been given by Mr MacDonald not to attend the meeting with Melbourne University (Ex A77, CB5656-5661).
Mr Roohizadegan pleads (at paragraph [23] of his Further Amended Statement of Claim) that this is the fourth instance of his exercising his workplace right to make a complaint in relation to his employment.
26 April 2016
Mr Di Marco replies to Mr Roohizadegan’s email of the previous evening saying “leave it with me to talk with Stuart [MacDonald]” (Ex A77, CB5656).
TechnologyOne’s Executive Team assembles to discuss the complaints Ms Gibbons has reported as having been made by staff in the Melbourne office about Mr Roohizadegan. Ms Carr attends as an invitee.
Ms Carr’s evidence is that Mr Di Marco commences the meeting by stating “This guy has to go” (T1029, line 10).
Ms Gibbons is called into the meeting to speak to her email. She does so and, after answering questions, leaves.
Ms Carr advises the Executive Team that TechnologyOne should not act against Mr Roohizadegan on the basis of mere allegations. There ought to be an investigation of any complaints made against him (T1027).
Ms Carr’s evidence-in-chief is that Mr Di Marco responds that he doesn’t want there to be any investigation (T1027).
At the conclusion of the meeting Mr MacDonald is authorised to terminate Mr Roohizadegan’s employment but is instructed he is not to do so before Mr Roohizadegan has concluded, inter-alia, a financially significant deal with La Trobe University on which he is working (T530-531).
After the meeting of the Executive Team Ms Carr begins to update the communications plan for Mr Roohizadegan’s termination that she had commenced drafting at Mr Harwood’s request in September 2015 (Ex R61, CB463).
27 April 2016
Mr MacDonald visits the Melbourne offices of TechnologyOne and meets Mr Roohizadegan, both for the first time (T974, T978).
3 May 2016
TechnologyOne’s Executive Team convenes for a second time to discuss Mr Roohizadegan’s future (Ex R64). Mr Di Marco queries whether dismissing Mr Roohizadegan is the right thing to do.
Ms Carr repeats her advice that TechnologyOne should investigate Mr Roohizadegan’s allegations (T1069, lines 41-42). Her advice is again rejected.
Mr Di Marco suggests that Mr Roohizadegan could be given an alternative role within TechnologyOne as a “strategic advisor” (T1031). However, he receives little or no support for that proposal.
4 May 2016
Mr Roohizadegan learns that Mr MacDonald has arranged to meet with La Trobe in his absence. Mr Roohizadegan sends an email to Mr MacDonald (cc’d to Mr Di Marco and Mr Harwood) objecting to his doing so on the basis that to bring new people into the process at such a late stage could compromise the big deal on which he was working (Ex A6, CB168; Ex A30, CB5881-5891).
6 May 2016
Ms Gibbons tells Mr Roohizadegan that he requires approval from HR to purchase Gold Class movie tickets to reward his sales staff (Ex A30, CB6002). Mr Roohizadegan escalates his concern about that decision to Mr Di Marco. Mr Di Marco intervenes, stating that Ms Gibbons requiring Mr Roohizadegan to obtain such approval is “plain stupid” and “embarrassing” (Ex A6, CB168; Ex A30, CB6003-6007).
At a meeting attended by a subset of TechnologyOne’s senior staff, Mr Di Marco reviews the draft communications plan for Mr Roohizadegan’s termination on which Ms Carr is working. He determines that it is not suitable for various reasons, including that the compensation plan is not fair enough. He directs that the plan, which up to that time had had Mr MacDonald terminating Mr Roohizadegan, should be changed so that he would be responsible for its implementation (T961, T981).
9 May 2016
Mr Roohizadegan and Mr Ivancic jointly forecast significantly increased sales for the Victorian region for the then current financial year during a sales forecast teleconference with Mr MacDonald. Mr Roohizadegan and Mr Ivancic each claim that Mr MacDonald becomes angry after hearing that news. Mr Roohizadegan claims Mr MacDonald swears at them, saying “you fucking two, get your forecasts together” (T196).
12 May 2016
During an otherwise routine meeting of TechnologyOne’s State Managers in Brisbane, Mr Roohizadegan is contacted at 12:14pm by text by La Trobe University. He arranges to take a call at 2:00pm (Ex A18, CB6343-6344).
Mr Roohizadegan claims that he asks Mr MacDonald to participate in that call, but that Mr MacDonald rebuffs him stating “Screw you Benham, I’ve seen your email” (T204).
Mr Roohizadegan takes the call from La Trobe (T206). He claims to have been told that La Trobe wanted a $7m reduction in the contract price they had not yet finalised. (T206). Mr Roohizadegan claims that he responded that he had no authority to make any concessions and that in any event a reduction of $7m was impossible. Mr Roohizadegan claims he was informed that a $1m reduction was the minimum La Trobe would accept (T207).
Mr Roohizadegan sends an email to the members of TechnologyOne’s Executive Team (Ex R23, CB6361) to inform them of La Trobe’s demand.
Shortly afterwards Mr MacDonald confronts Mr Roohizadegan. Mr MacDonald tells Mr Roohizadegan that he had instructed him not to negotiate with La Trobe. Mr Roohizadegan denies being given any such instruction. Moreover, he had not negotiated anything (T211). Mr Roohizadegan claims that Mr MacDonald abused, bullied and swore at him (T211-212).
Mr Roohizadegan flies home to Melbourne in distress.
13 May 2016
Mr Roohizadegan emails Mr Chung (Ex A56, CB6552) and Mr Di Marco (Ex A30, CB6411-6427) to complain about his having been bullied by Mr MacDonald.
Mr Roohizadegan pleads (at paragraph [45] of his Further Amended Statement of Claim) that his complaint to Mr Chung is the fifth instance of his exercising his workplace right to make a complaint in relation to his employment.
Mr Roohizadegan pleads (at paragraph [40] of his Further Amended Statement of Claim) that his complaint to Mr Di Marco is the sixth instance of his exercising his workplace right to make a complaint in relation to his employment.
Mr Di Marco responds early in the morning by email and tells Mr Roohizadegan that such behaviour is unacceptable (Ex A30, CB6411-6427). Mr Di Marco then makes two telephone calls to Mr Roohizadegan (T216-217).
Mr Di Marco later emails Mr Roohizadegan, cc’ing in Mr Chung and Ms Carr, informing him that Mr MacDonald has been counselled. He advises Mr Roohizadegan that he should relax and enjoy the weekend. Mr Di Marco expresses the hope that everyone would “start afresh” on Monday (Ex A24, CB6431).
Mr Roohizadegan obtains a medical certificate stating that he is unfit for work until 17 May 2016 inclusive (Ex A25, CB6346).
14 May 2016
Mr Roohizadegan emails Mr Di Marco. He advises Mr Di Marco that he is “still not well, on medication based on doctor’s advice, but did not want this to impact my work” (Ex A6, CB1678; Ex A30, CB6579-6584).
15 May 2016
Mr Roohizadegan sends a second email to Mr Di Marco complaining about MacDonald’s behaviour. He tells Mr Di Marco that he has “completely fallen apart” as a result. He attaches a medical certificate stating that he is unfit for work. He asks what “disciplinary action” Mr Di Marco proposes to take (Ex R26, CB6665-6667).
Mr Roohizadegan pleads (at paragraph [27] of his Further Amended Statement of Claim) that his complaint to Mr Di Marco is the seventh instance of his exercising his workplace right to make a complaint in relation to his employment.
16 May 2016
Mr Di Marco sends an email to Mr Roohizadegan advising him that Ms Carr will investigate his complaint about Mr MacDonald and that in the meantime both he and Mr MacDonald should go back to work and resume their relationship (Ex R26, CB6664).
Mr Roohizadegan is then sent a calendar invitation to attend a meeting in Brisbane with Mr Di Marco on 18 May 2016 at 10:30am. In explanation, Mr Di Marco sends an email to Mr Roohizadegan stating “I have allocated 5 hours for our meeting Wed so we are not rushed. If it finishes earlier that’s okay” (Ex R38, CB6669-6670).
Ms Carr rings Mr Roohizadegan to ask him about his bullying complaint against Mr MacDonald (Ex CB465; T1078).
17 May 2016
Mr Di Marco meets with Mr Chung. Mr Di Marco raises whether TechnologyOne is doing the right thing in terminating Mr Roohizadegan’s employment on the basis only of hearsay (T653; Ex R68, CB536).
Ms Carr speaks, inter-alia, to Mr Chung, Mr MacDonald and Mr Pye in respect of Mr Roohizadegan’s bullying allegations against Mr MacDonald. Ms Carr claims she then reported (orally) to Mr Di Marco that while Mr Roohizadegan and Mr MacDonald had had a robust conversation on 12 May 2016 what had then occurred did not amount to bullying.
Ms Carr continues to finalise arrangements for Mr Roohizadegan to be dismissed the following day (Ex A57, CB7078-7086).
Mr Roohizadegan flies to Brisbane.
18 May 2016
Mr Di Marco summarily terminates Mr Roohizadegan’s employment at TechnologyOne at approximately 10.00am. Mr Roohizadegan is given a deed of release (Ex R29, CB7164-7170) to consider. He is informed it is non-negotiable (T228; T644).
Mr Di Marco emails all TechnologyOne staff at 11.00am to advise them that Mr Roohizadegan’s employment has been terminated (Ex R28, CB7148).
Mr Roohizadegan is profoundly shocked by those events.
On the Applicant’s case his termination is adverse action for reasons prohibited by the Fair Work Act in consequence of which he has suffered loss and damage.
The evidence and the credit of the principal witnesses
Principles applied
The parties agreed, and the Court ordered, that evidence concerning a number of critical matters (such as what transpired between Mr Roohizadegan and other relevant persons during the events he alleges were bullying) would be given viva voce. The trial was conducted on that basis. Having regard to that agreement, the paragraphs relating to the content of such conversations and events as were contained in the affidavits otherwise relied on by the parties were not read. The most critical evidence of the principal witnesses was thus given orally.
While adducing evidence viva voce may be accepted to have advantages over the giving of evidence by way of affidavit where the credit and reliability of recall must be assessed, it too has risks and weaknesses. It is in the nature of a trial, particularly one conducted some years after the events in dispute occurred, that a witness’s memory can - and, as judicial experience shows, not infrequently does - prove fallible. A court should therefore be cautious of attributing dishonesty to a witness who gives evidence which is not accepted.
Entirely without guile, a witness may confidently recall what they said, saw or did at the time of an event in terms that cannot be true. A belief that they must have acted or spoken in a particular way can become their actual, but false, recall. Further, because human memory is not as reliable as we would wish, this risk of firm but reconstructed memory increases as time passes. Contemporaneous written records, to the extent they exist, therefore generally provide a more solid basis for judicial fact-finding than human memory.
In this proceeding a number of important events were the subject of email exchanges or referred to in contemporaneous documents. Where the providence of such a document is not in dispute I have proceeded on the basis that - save where good reasons have been advanced for reaching a different conclusion - the Court should prefer what a contemporaneous document reveals, and any inferences open to be drawn on that basis, over the contrary present recall of a witness.
That acknowledged, there are a number of critical alleged events and conversations upon which this case potentially turns which were entirely undocumented. In such instances the Court cannot avoid basing its findings on contested evidence given by witnesses as to what was, or was not, said or done in particular circumstances: having regard to the inherent or contextual plausibility or implausibility of the evidence they gave, and the Court’s assessment of their credit.
Counsel representing the parties helpfully provided detailed written submissions with respect to the credit findings they respectively submitted the Court is entitled to, and should, make with respect to a number of witnesses who gave evidence in this proceeding.
It is convenient at this point first to address the evidence given by four of the most critical witnesses in this proceeding, and the parties’ respective submissions as to their credit. I proceed on that basis because in most regards, the remaining evidence is of more marginal relevance. That is because much of the evidence given by the other witnesses in this trial throws little or no light on the critical question of what was or were Mr Di Marco’s reason or reasons for his decision to dismiss Mr Roohizadegan. Moreover having regard to the principles governing the construction of contracts that bind this Court, little of that evidence is dispositive or even relevant in regard to Mr Roohizadegan’s claim in contract.
Benham Roohizadegan
Mr Roohizadegan gives evidence that in 2006, in the course of pre-contractual discussions between himself and Mr Di Marco, he had been assiduous to seek and obtain confirmation that the incentive bonus provided for in the contract he ultimately signed was to apply to his benefit in respect of all revenue generated by TechnologyOne in the Victorian region without exception. In cross-examination, Mr Roohizadegan explained that he had sought that assurance because he had left his previous job after a dispute between himself and his former employer in respect of the scope of such a clause. He had not wanted any such problems to arise in his new role (T262, lines 1-8).
His contract, into which he had entered on 3 July 2006 after those discussions, provided that his remuneration was to include a base salary package plus an incentive bonus “based upon Profit Before Tax (PBT) performance” to be “constituted from an agreed percentage of the Region’s PBT performance”.
It is uncontentious that that contract was varied on 7 March 2007 by an agreement which set a schedule of revised “agreed percentages” upon which his incentive bonus was to be based for particular periods into the future.
By a further agreement dated 26 November 2009, Mr Roohizadegan’s contract of employment was varied for a second time. As varied, it refers to his being entitled to an incentive based on “Profit Before Tax (PBT) performance for Business Unit 03 – Victoria – Service Delivery”. The variation increase the rate of that incentive (7.5% from 1 October 2009 to 30 September 2010 and then 7% from 1 October 2010 onwards) above that which would have applied under the existing contract. The terms (but not the construction) of the contract as varied are not in dispute.
Mr Roohizadegan gave evidence that from the outset of his employment with TechnologyOne, some TechnologyOne products sold in Victoria that had been directly marketed or serviced from Brisbane had been included as part of his PBT performance. In respect of those sales, he had routinely received incentive payments.
However, his evidence is that he had also been contractually entitled to – but did not receive – incentive payments in respect of his PBT performance revenue from certain other TechnologyOne products sold in Victoria: principally Student Management Services (SMS) but later also “Plus Services”, and certain financially less significant transactions involving Victorian Legal Aid and Victorian Red Cross. He pleads that he is therefore entitled to damages for breach of his contract.
Mr Roohizadegan gave evidence that he had complained regularly to TechnologyOne, both before and after the variation to his contract on 26 November 2009, about not being paid incentives due to him in respect of such sales. His evidence was that he first raised that subject with Mr Di Marco during a discussion with Mr Harwood, Mr Phare, and Mr Di Marco that took place at the Gold Coast around 9 November 2009 (Ex A6, CB141-CB143).
It is uncontentious that on 8 April 2011, Mr Pye sent an email to Mr Roohizadegan to explain TechnologyOne’s commission policy. I infer that this was in response to a complaint or complaints that Mr Roohizadegan gave evidence of having made, concerning what he asserted to be the partial non-payment of the incentives to which he was entitled. Mr Roohizadegan’s evidence is that he made a contemporaneous handwritten note on a printed copy of Mr Pye’s email: “Where is SMS?! Regional P&L?? told to wait … Year End!” (Ex A37, CB1173).
Mr Roohizadegan’s evidence is that notwithstanding his complaints in that regard, he worked assiduously in TechnologyOne’s interests from when he was first employed. He had built the Victorian region up from small beginnings to one where his incentives were calculable on profit and loss before tax of approximately $45 million.
I have set out above at [24]-[45] the substance of Mr Roohizadegan’s evidence as to his distress from September 2010 onwards after his daughter became ill with Kawasaki disease. I need not repeat that discussion. It is sufficient that I restate that, for the reasons I gave, I accept that Mr Roohizadegan found refuge in his work and that by reason of the compensation mechanisms he adopted his work performance was not materially adversely affected by his private suffering.
Mr Roohizadegan’s evidence is that Mr Di Marco always encouraged him to run the Victorian region as if it were his own business. He was never denied direct access to Mr Di Marco. He had understood that Mr Di Marco thought well of him. He was the recipient of the Chairman’s Award in each of 2012, 2013 and 2014. That was an award made by Mr Di Marco and given to only a small number of TechnologyOne’s highest performing staff. His evidence is that having regard to his success in building TechnologyOne’s business, he pressed Mr Di Marco for additional financial recognition by way of giving him an equity interest in the company. Mr Di Marco had authorised that to happen. He had been granted share options in TechnologyOne in both 2013 and 2015.
His evidence is that although he personally played a significant part in making sales and building the business of TechnologyOne in Victoria, his role was not confined to securing new sales. Consistently with his contract, he had been responsible for the profitable management of the whole of the operations of TechnologyOne in Victoria.
His evidence is that in February 2015 he was promoted by TechnologyOne from the position of State Manager for Victoria to the position of Regional General Manager. His promotion to that position is not in dispute, although the Respondents submit that that was simply an aspect of a reorganisation within TechnologyOne in which State Managers in all of the more economically significant regions such as Victoria and New South Wales were given additional responsibilities.
His evidence is that he worked well and constructively with his first two direct reports, Mr Phare and Mr Thompson. He accepted there had been some initial tension when Mr Thompson replaced Mr Phare. However, his evidence was that he had accepted Mr Thompson’s mentoring. They had thereafter worked extremely well together.
His evidence is that he encountered significant difficulties only after Mr Harwood replaced Mr Thompson as TechnologyOne’s Operating Officer for Sales and Marketing. Those difficulties stemmed from his objections to Mr Harwood making unilateral decisions affecting his management of the Victorian region.
I note however that Mr Roohizadegan’s evidence is that even before he had become his direct report, Mr Harwood had to a limited extent intruded into his management of his region. His evidence is that in 2012 Mr Harwood had interfered in that way by intervening to prevent the termination of an under-performing employee. Mr Roohizadegan’s evidence is that Mr Di Marco became angry with Mr Harwood when Mr Roohizadegan complained to him about that interference (T169, lines 10-22).
Mr Roohizadegan’s evidence is that in March 2015, after Mr Harwood had become his direct manager, Mr Harwood had appointed Mr Metcalfe to the position of Regional Sales Manager for Victoria: ostensibly to assist him to manage his increased responsibilities in the position of Regional General Manager. However, he had done so without consulting him. Mr Roohizadegan had complained to Mr Harwood that Mr Metcalfe was unsuitable for that position.
Mr Roohizadegan’s evidence is that at around the same time (in June 2015), Mr Harwood moved to terminate the employment of one of his sales team: Mr Con Tsalkos (Ex A6, CB154-5). He had opposed that decision, his prior understanding having been that Mr Tsalkos was to be placed on a performance management plan and given a chance to improve. He gave evidence that the same had occurred in respect of another employee, Mark Loler (T320).
Mr Roohizadegan’s evidence is that he sent an email to Mr Metcalfe, cc’ing Mr Di Marco, questioning why he and Mr Harwood had made the decision to terminate Mr Tsalkos on particular terms. He complained in his email that the decision to dismiss them had been taken without his involvement. He complained that he “cannot run [his] region in parallel with a fifth column” (Ex R12, CB4274-4275).
It is uncontentious that Mr Di Marco told Mr Roohizadegan and Mr Harwood to “sort it out, as this is escalating needlessly” and that “mistakes happen” (Ex R12, CB4266).
On 26 June 2015 Mr Di Marco informed Mr Roohizadegan and Mr Harwood that he had “recruiters telling [him] they will not put good sales staff to us in Victoria”. Mr Roohizadegan’s evidence is that he understood Mr Di Marco to have associated that difficulty with Mr Harwood having recently terminated Mr Tsalkos and Mr Loler (T321). In an email, Mr Di Marco instructed Mr Harwood and Mr Roohizadegan “the revolving door has to stop”. He told Mr Harwood that he was holding him accountable in that regard (Ex R13, CB4304).
It was in that context that Mr Roohizadegan then gave evidence that when Mr Harwood sent him an email on 12 January 2016 stating that “Victoria cannot go backwards for a fourth year in a row”, he had rejected that assertion in a long email which he had copied to Mr Di Marco (Ex R33). Mr Roohizadegan’s evidence is that he felt offended by Mr Harwood’s accusation (T304, lines 14-26). His evidence is that Mr Harwood was factually wrong to have claimed that the Victorian region had gone backwards (even if that statement were understood as applying only to new licence fees) for the past three years. He arranged to meet Mr Di Marco on 3 February 2016 to correct the record, and to complain about Mr Harwood undermining him.
He gave evidence that when Mr Harwood learned that he had arranged to meet Mr Di Marco, Mr Harwood demanded he cancel the meeting. Mr Roohizadegan’s evidence is that Mr Harwood had threatened that “one of us has to go” when Mr Roohizadegan rejected his repeated demands to do so (T172-173).
Mr Roohizadegan’s evidence is that he made a handwritten contemporaneous note of those events in his diary. His note is in evidence as Ex A11 (CB4932). It reads as follows:
Monday 1 February 2016
Martin [Harwood] called whilst having lunch with Darryl
Said that he has just had a meeting with Adrian [Di Marco]
Why I am seeing Adrian this Wednesday and it is very serious so I need to tell him why and Martin wants me to call him later on
6:10pm Melbourne time – Martin called and I called Martin back, he was very very angry, why I am seeing Adrian, he is his boss and not my boss, I said Adrian is my boss too. I said Martin you expect me to advise big numbers but you do not support me and make decisions for my region, how do you expect me be accountable! etc
Tuesday 2 February 2016
Martin called me again @ 12pm today
He’s not happy with me, seeing Adrian etc.
I didn’t follow his instructions, I told him to give me an example of when
He said I lectured him on ‘how he can help me’ last night and he has been thinking last night
One of us has to go!
I said I am not going anywhere
Martin said that he is going to prepare a list for Adrian & tomorrow we see how things pan out! Martin has seen my e-mails to Adrian, and he is going to scrutinise me closely if I stay.
*Martin again called, left a message, I called back & he said we must make an offer to Boris [Ivancic], new Sales Manager today, I said this is the issue where everything started as I don’t agree to give him a guaranteed commission.
Martin said he is going to make a list of everything that I am going to complain to Adrian about and one of us has to go!
(Spelling and grammar as in original handwritten entry).
Mr Roohizadegan’s evidence is that when he and Mr Di Marco met on 3 February 2016 he complained to Mr Di Marco about Mr Harwood having undermined him in his role, bullied him and having made decisions behind his back. He also told him that Mr Harwood had threatened him that if he did not cancel his meeting, one of them would have to go (T176, line 41-T177, line 14; T361, lines 5-14).
Mr Roohizadegan’s evidence is that after he made Mr Di Marco aware of Mr Harwood’s conduct Mr Di Marco had said to him “I’m not having any of this from Martin. I’m going to get him”. He had left his office to do so. Mr Roohizadegan’s evidence is that just before Mr Di Marco went to fetch Mr Harwood Mr Di Marco had asked him not to “tell [Mr Harwood] in front of me that he has said to you ‘one of us has to go’”.
His evidence is that Mr Di Marco had returned a few minutes later with Mr Harwood. He told the Court that Mr Harwood “didn’t seem to be happy” (T177, line 30).
Mr Roohizadegan’s evidence is that Mr Di Marco then had “said to both of us, ‘I think the world of both of you. I like you both. What is the issue?’”, to which he had responded by saying to Mr Di Marco “I like to recruit my own sales manager. I like to have my resources. I like not to be undermined. I like decisions not being made behind my back”.
His evidence is that he had told Mr Di Marco about Mr Harwood having vetoed Mr Pantano, who had been his first choice for the position of Regional Sales Manager. Their discussion had then turned to whether Mr Ivancic (who both Mr Di Marco and Mr Harwood agreed was suitable to be appointed), should be guaranteed a commission or not.
Mr Roohizadegan’s evidence is that in the course of opposing offering Mr Ivancic a guaranteed commission for six months, he took the opportunity to raise with Mr Harwood and Mr Di Marco his own unpaid incentives for SMS by TechnologyOne to TAFE and universities in Victoria as were contractually due to him (T179, lines 20-37; T361, lines 15-23).
Mr Roohizadegan’s evidence is to the effect that Mr Di Marco agreed with Mr Harwood that Mr Ivancic should be offered a guaranteed commission. Mr Roohizadegan gave the following evidence as to the events that then transpired (T180-181):
Mr Roohizadegan: I said to – to Mr Di Marco and Mr Harwood. I said, “Okay. We go with Boris. We give him six months guaranteed commission. But if things doesn’t work out for my region, please do not hold me accountable for your decision.” And then Mr Harwood said “Behnam –” I – I remember he put his finger at me, “Behnam”, like this – “Behnam, you are responsible for Victoria. I hold you accountable, even though we are making decisions for you to have Boris or someone else as your sales manager.” And he raised his voice, similar to the way I tried to explain, your Honour, with a finger at me like this. And Mr Di Marco got a bit upset. I could see that. And then Mr Di Marco turned to Martin and said, “Martin, get out of my house. Martin, get out of my office now. I want to have another five minutes with Behnam alone.”
Mr Tracey: And what happened next?
Mr Roohizadegan: And then when Martin was leaving the office, his face was very red. He just gave me a look as he was leaving the office, and then Mr Di Marco turned to me, he said, “Buddy, I know how good you are. You do good work for me. You escalate things to me. I love the way you do things. Continue as you are, but I want you to know that I had to show that I’m on the side of Martin too because I need him as well as I need you”, some words to that effect. “Continue the way you are.” I asked him – at the end of that conversation, I asked him – because by that time I was just thinking, “Am I doing something wrong?” And – and I asked Mr Di Marco “Adrian –” I had a good relationship with Adrian, and I said, “Adrian, do I need to change anything?” And he said, “Not at all. Continue as you are. I’m happy you bring your prospects and your executives to Brisbane to see me. Continue as you are and carry on as you are.” And – and then I said to him before I left “So we – we had –” he asked me about my daughter, by the way, as well, around that time, “How is your daughter?” I said, “Well, it’s difficult, but I’ve focused my work on my – I’ve focused my life on my work.” And then – and before I left the room, I – I actually thanked Adrian. I said “Adrian, I would like to thank you that – and I appreciate –” I said, “I appreciate you take the time to see me one-on-one whenever I come to – whenever I come to – to Brisbane.” And then he turned back to me and he said, “Behnam, I am the one who should be thanking you. I’m the one who should be thanking you.” And I felt a bit embarrassed because this is the chairman of the company, and he – he – he said to me, “I’m the one who should be thanking you.” And I – I – I remember when I came back from the Brisbane trip I asked my wife, I said, “Why he’s thanking me?” I didn’t get it. And my wife said, “He’s effectively telling you that he appreciates that you tell him things, your – your transparency”, because I – I felt – when he said, “I’m the one – I should be thanking you”, I felt embarrassed. You know, I just – I just can’t explain the feeling I felt.
Mr Tracey:Okay. So that meeting between you and Mr Di Marco then ends?
Mr Roohizadegan: Yes, he said something else as well. I’m sorry, I just remembered. He – he said, “Behnam, go and build a relationship with Martin.”
His Honour: Sorry, he said?
Mr Roohizadegan: He – Adrian said to me, “Go and build a relationship with Martin.”
Mr Tracey: Okay?
Mr Roohizadegan: And I said, “I don’t have any issues with Martin.”
Their Honours continued (at [40]):
This Court, in Pacific Carriers Ltd v BNP Paribas [(2004) 218 CLR 451], has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement.
(Emphasis added)
The plurality (French CJ, Nettle and Gordon JJ) in Mt Bruce v Wright Prospecting [2015] HCA 37; 256 CLR 104 at [46]-[51] (Mt Bruce) again robustly restated the objective theory of construction in the following terms, which both parties agree bind this Court:
46.The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose.
47.In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean. That inquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract.
48.Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning. [
49.However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding “of the genesis of the transaction, the background, the context [and] the market in which the parties are operating”. It may be necessary in determining the proper construction where there is a constructional choice. The question whether events, circumstances and things external to the contract may be resorted to, in order to identify the existence of a constructional choice, does not arise in these appeals.
50.Each of the events, circumstances and things external to the contract to which recourse may be had is objective. What may be referred to are events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating. What is inadmissible is evidence of the parties’ statements and actions reflecting their actual intentions and expectations.
51.Other principles are relevant in the construction of commercial contracts. Unless a contrary intention is indicated in the contract, a court is entitled to approach the task of giving a commercial contract an interpretation on the assumption “that the parties … intended to produce a commercial result”. Put another way, a commercial contract should be construed so as to avoid it “making commercial nonsense or working commercial inconvenience”.
(Footnotes omitted).
Mr Roohizadegan signed his initial contract of employment (the Employment Agreement) with TechnologyOne on 3 July 2006. Clause 4.1 of his contract provided that his remuneration would be as set out in Schedule 1. The relevant terms of his contract with respect to both his base salary and incentives were accordingly contained in that Schedule. Those terms were as follows:
I have concluded that there is no ambiguity in those provisions. On any natural and ordinary reading of that text, Mr Roohizadegan’s employment contract expressly provides that he will be paid a bonus of 5.75% based on all PBT earned by TechnologyOne in respect of the Victorian region: understood as a geographical entity. On the face of that intractable language I am satisfied that Mr Roohizadegan’s entitlement to be paid a bonus on any PBT generated by TechnologyOne in respect of sales to a company or organisation physically based in the Victorian region was not subject to any exceptions. I am satisfied that on a plain reading, there is no scope in that language that would permit TechnologyOne to unilaterally impose any carve out.
In Mt Bruce Kiefel and Keane JJ stated they were proceeding on the basis that the issue of whether there needed to be patent ambiguity in the text of an agreement before recourse might be had to context was unnecessary to resolve (at [111]). Bell and Gageler JJ noted that intermediate courts of appeal were currently divided as to the correctness of that position having regard to the reasoning in Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; 149 CLR 337 (Codelfa).
Assuming, contrary to my conclusion that the text is relevantly unambiguous, that a constructional choice must be made, the process of ascertaining what a reasonable person in the position of the parties to a contract would have understood its terms to mean involves consideration not only of the text but also the surrounding circumstances known to all the parties, as well as the purpose and object of the transaction. As Lord Wilberforce explained in a frequently cited passage from his speech in Reardon Smith Line Ltd v Hansen-Tangen [1976] 1 WLR 989 at 995-996 (as was approved in Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; 218 CLR 451 at [22] and Royal Botanic Gardens and Domain Trust v South Sydney City Council [2002] HCA 5; 240 CLR 45 at [10] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ):
In a commercial contract it is certainly right that the court should know the commercial purpose of the contract and this, in turn, presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating.
On that premise, I would in any event reject the Respondents’ submission that having regard to the context in which those provisions were agreed and their commercial purpose Mr Roohizadegan’s contract of employment ought to be construed on the basis that a reasonable businessperson entering into that agreement would not have expected to be paid incentives on work done by consultants which he or she did not supervise and for which he or she was not financially responsible.
The purpose of Mr Roohizadegan’s job was not limited to direct selling. It was to manage and develop what was then a small part of TechnologyOne’s market. That purpose, as contractually agreed, was identified in the “Job Description” in Schedule 2 of the Employment Agreement as follows:
Mr Tracey and Mr Minson’s closing submissions refer to the following evidence as relevant to the then surrounding circumstances:
The surrounding circumstances relevant to the construction of the 2006 Agreement include the following:
(a)during the Applicant’s pre-employment interviews, the Applicant was informed that the First Respondent’s business was broken up into business units based on geographical regions and that he would be incentivised on the basis of the performance of the Victorian region;
(b)the Applicant was not informed that there were separate, non-regional, business units;
(c)the Applicant was told during these pre-employment interviews that a sale would be allocated to the Victoria region if the organisation’s head office was located in Victoria
(d)at no stage in the pre-employment process was the Applicant informed that certain types of revenue from an organisation with a head office based in Victoria (including revenue associated with the sale of Student Management Services) would be the subject of an exclusion, and that such revenue would be put into a separate business unit Indeed, the Applicant was expressly informed that the contrary was the case;
(e)it was mutually known, during the pre-employment interviews, that the higher education was a key market for the First Respondent, and yet still, the Applicant was not informed that revenue associated with that market would be excluded.
(Footnotes omitted).
It is also telling that Dr Spry did not challenge the truth of Mr Roohizadegan’s evidence as adduced during cross-examination that before he had entered into that contract he had expressly asked whether there were any exclusions in respect of his entitlement to be paid a bonus on all profits earned by TechnologyOne in his region. Mr Roohizadegan’s evidence was to the effect that he had asked that question because he had been anxious to ensure there was no potential for any misunderstanding. His evidence (which was relevantly unchallenged) was that Mr Di Marco had assured him that his entitlement to incentives on PBT earned in Victoria would not be subject to any exceptions (T262, lines 1-8).
I am satisfied that, assuming it is appropriate to have regard to context, Mr Roohizadegan’s 2006 contract of employment must still be construed as carrying the meaning that I have concluded it facially to convey: that is, that all revenue received by TechnologyOne in respect of an entity physically present in Victoria is to be included in the calculation of Mr Roohizadegan’s entitlement to a bonus based on TechnologyOne’s PBT in his region.
The Employment Agreement was varied on 7 March 2007. That variation was to Schedule 1. Accordingly, the terms of his 2006 contract relating to his remuneration by way of salary and bonuses were substituted for by the following:
It will thus be seen that in consequence of that variation, the language of “bonus” is replaced by that of “incentive percentage”. Further, rather than the Schedule referring to Mr Roohizadegan being entitled to a bonus based on a percentage of “the region’s PBT”, the substituted Schedule 1 provides for five differential rates of incentives to be paid to him for each of five forthcoming financial years “based on Regional Profit Before Tax".
In my opinion those variations are not open to be understood to have affected the fundamental nature of Mr Roohizadegan’s entitlement to be paid, in addition to his base salary, a bonus (now termed an “incentive percentage”) calculated on the basis of any PBT generated by TechnologyOne in respect of sales to any company or organisation physically based in the region. That is illuminated in Schedule 2 to the variation (which is unfortunately described, in that it varies Schedule 1 of the original Employment Agreement, rather than Schedule 2). That document identifies that such an incentive “will be based on Profit Before Tax for the specified region”. That can only be a reference to the “specified region” for which Mr Roohizadegan was responsible: Victoria.
Insofar as the purpose and object of a contract is relevant to its construction, it is important to observe that the High Court has expressly recognised that employment relationships are not purely contractual. They can be and are affected by statutory provisions and the incidents of a fiduciary relationship: Concut Pty Ltd v Worrell [2000] HCA 64; 176 ALR 693 (Concut) at 697-698 ([17]) per Gleeson CJ, Gaudron and Gummow JJ. In that case, an employment relationship had existed over a lengthy period. Initially, the employee had worked for a related company of the employer. However, in 1980 he began working for the employer in question on an oral contract. He later signed a service agreement with that employer in 1986. The 1986 agreement was the subject of the dispute. The High Court held that the service agreement was not properly characterised as a new and discrete contract that had replaced and terminated the earlier oral agreement. Gleeson CJ, Gaudron and Gummow JJ said (at 698 ([19]):
19.The relevant principles are well settled. In FCT v Sara Lee Household & Body Care (Aust) Pty Ltd [(2000) 172 ALR 346 at 350-1 [22]; 74 ALJR 1094 at 1098], Gleeson CJ, Gaudron, McHugh and Hayne JJ said:
When the parties to an existing contract enter into a further contract by which they vary the original contract, then, by hypothesis, they have made two contracts. For one reason or another, it may be material to determine whether the effect of the second contract is to bring an end to the first contract and replace it with the second, or whether the effect is to leave the first contract standing, subject to the alteration. For example, something may turn upon the place, or the time, or the form, of the contract, and it may therefore be necessary to decide whether the original contract subsists.
Their Honours went on to refer to the judgment of Taylor J in Tallerman & Co Pty Ltd v Nathan's Merchandise (Victoria) Pty Ltd [(1957) 98 CLR 93 at 143-4]. Taylor J had rejected submissions that (a) "it is impossible by a subsequent agreement, merely, to vary or modify an existing contract” and (b) "[an] agreement which purports to vary an existing contract operates … first of all to abrogate entirely the existing contractual relationship and, then, to reinstate the terms of the old contract as varied or modified by the new agreement” [cf Meek v Port of London Authority [1918] 2 Ch 96]. His Honour, to the contrary, accepted the propositions that (a) the earlier contract might be rescinded altogether, the determining factor being the intention of the parties disclosed by the later agreement; (b) partial rescission is a variation, not the destruction, of the contractual relationship between the parties; and (c) the earlier contract may be varied by way of (i) partial rescission with or without the substitution of new terms for those rescinded and (ii) the addition of new terms with or without any partial rescission at all [(1957) 98 CLR 93 at 144]. In Tallerman, Kitto J spoke in terms which involved acceptance of propositions (a) and (b) as identified above, adding that while “in strict logic” a variation may be a new contract, “the discharge of an old contract is a matter of intention”.”
(Emphasis added; footnotes omitted except where expressly set out).
In my view, it is plain that on the facts of the present case in agreeing to the relevant variations neither party intended to abrogate entirely their pre-existing contractual relationship in such a way as would have permitted TechnologyOne unilaterally to exclude from its regional PBT any profit from sales achieved by it in Victoria: however facilitated.
In his closing written submissions Dr Spry refers to Mr Chung as having sent an email on 7 July 2008 to all employees who received incentive payments, in consequence of TechnologyOne having decided to change its financial year in mid-2008. The email relevantly stated as follows:
Incentives are paid on Profit Before Tax performance of the employee’s specified region.
They are paid on a monthly basis (with the exception of Student Management which is paid after 6 and 12 months) …
To understand why Dr Spry highlights that correspondence, it is necessary to consider the second variation to Mr Roohizadegan’s Employment Agreement.
On 26 November 2009, Mr Di Marco wrote to Mr Roohizadegan advising that as the terms of his employment had now changed it would be necessary to (again) vary the terms of his Employment Agreement. The variation would take (retrospective) effect from 1 October 2009. It is uncontentious that Mr Roohizadegan countersigned that letter to indicate that he had accepted TechnologyOne’s offer. I take it to be uncontentious that the requirement for a variation related to the changes in the company’s financial year. I further understand it to be uncontentious that it was made clear to all employees remunerated in part by incentives (and was noted in Mr Di Marco’s letter to Mr Roohizadegan of 26 November 2009) that their total remuneration review would subsequently be effected on October 15 each year, in consideration of end of financial year data.
The 26 November 2009 variation to Mr Roohizadegan’s position, status of employment, and entitlement to remuneration was as follows:
Schedule 2 to the 26 November 2009 variation was also incorporated into Mr Roohizadegan’s Employment Agreement. Mr Di Marco’s letter inviting Mr Roohizadegan to accept the variation had informed him that the Schedule was “a current description of his role”. Schedule 2 adds by way of detail the following:
Dr Spry submits that having been advised by Mr Chung that incentives paid on “Student Management” would be paid 6 or 12 months in arrears rather than on a monthly basis as he would ordinarily have been entitled to receive them, it is “inconceivable” that Mr Roohizadegan would not have insisted on that being remedied prior to executing the variation he had agreed to in November 2009 if he were entitled to be paid incentives in respect of that product.
Why that should be concluded is however unclear. Indeed, the submission is entirely implausible. Schedule 2 of the 26 November 2009 variation advised Mr Roohizadegan that while in most instances incentive payments would be paid monthly in advance, an exception “may be with payments to managers for high value products with a low level of sales where the monthly profit varies considerably”. Mr Roohizadegan may well have been content with such an explanation in respect of SMS products. He was not cross-examined to suggest otherwise.
In any event, Mr Roohizadegan’s subsequently expressed concerns were not in relation to the timing when payments for SMS products sold in Victoria had been brought to account. They went to the more fundamental issue of whether his right to have his performance measured on the basis of PBT ought to have included those sales.
In that more fundamental regard, there is nothing in Mr Chung’s email of 7 July 2008 as would have alerted a reasonable person in Mr Roohizadegan’s position that TechnologyOne was intending to exclude SMS sales from his entitlement to receive an incentive based on PBT performance in his region.
Nor was any evidence adduced on behalf of the Respondents as would reveal the existence of any contextual circumstances that might objectively have required a reasonable person in Mr Roohizadegan’s position to understand that a reference in the 26 November 2009 variation to his entitlement to be paid an incentive based on PBT “performance for Business Unit 03-Victoria” involved an exclusion in respect of SMS products. Such an exclusion would be one for which his Employment Agreement had not initially provided, given that it referred without exclusion to his entitlement to be paid a bonus based on “the region’s PBT performance”. Similarly it was not provided for by the first variation thereto, which had equally provided for him to be paid an incentive based on “regional Profit Before Tax” without qualification. Having regard to the principles outlined in Concut, I am satisfied that there is no basis for this Court to construe the text of the second variation as being to a different substantive effect. In referring to “Business Unit 03-Victoria”, the text simply adopts updated corporate language that reflects the same substantive entitlement.
Dr Spry submits that:
204.SMS was its own business unit, responsible for its own profit and loss, because it was a unique product requiring specialised knowledge which was lacking in the State based business units/regions. SMS consultants, until 2010, working in Victoria did not report to the Applicant. Rather, they reported to managers within the SMS business unit, and their salaries were costed not, for example, to the Applicant’s region, but to the SMS business unit.
(Footnotes omitted).
All that may be accepted. However, acceptance of those facts does not displace Mr Roohizadegan’s contractual right to be remunerated by way of incentives for the performance of his region without excluding those products when calculating its PBT. I am satisfied, putting aside the principle established in Concut, that even in that circumstance there is no relevant ambiguity in the terms of Mr Roohizadegan’s varied Employment Agreement as would admit any exception to his entitlement to receive incentives based on his performance as PBT generated within “Business Unit 03-Victoria”. There is no suggestion that that business region does not coincide with the geographical boundaries of the state of Victoria.
Dr Spry points to TechnologyOne having published royalty rules for FY2010 and onwards that might have suggested a different reading. Self-evidently however, that could have become known to Mr Roohizadegan only after he had entered into the 26 November 2009 variation of his Employment Agreement. Any subsequent unilateral action by TechnologyOne, whether or not it became known to Mr Roohizadegan, cannot retrospectively alter the terms of the contract to which he and TechnologyOne had bound themselves.
To the extent that such a submission is advanced, I also reject the proposition that a subsequent decision by TechnologyOne that its regions should be incentivised for sales of SMS products to a lesser degree than for other products alters the position. It is not suggested that Mr Roohizadegan entered into any accord and satisfaction as would bind him to that less generous outcome. There is no evidence to suggest his receipt of any partial amount was by an agreement supported by consideration. That not being so, his acceptance of those lesser amounts did not extinguish his entitlement to sue for the balance.
I therefore reject any construction of Mr Roohizadegan’s Employment Agreement as varied in 2009 as would permit TechnologyOne to exclude revenue due to sales of SMS products from inclusion in the calculation of his incentives.
I am satisfied that Mr Tracey and Mr Minson are correct to submit that his Employment Agreement (as varied over time) must be understood as having at all times required TechnologyOne to include all revenue received from sales of that product in Victoria in the calculation of his incentives.
Contrary to his contractual entitlements, such sales were initially not included and later were only partially taken into account. I am thus satisfied that Mr Roohizadegan establishes his contractual claim.
As the parties are agreed in that circumstance as to the amount to be awarded ($1,590,000.00) I need not address that question further. I will make provision for the parties to make submissions in respect of any interest thereon that ought to be awarded.
Costs
Neither party has advanced submissions as to costs. That may simply be because s 570 of the Fair Work Act precludes, save in limited instances, a Court awarding costs in a matter litigated pursuant to that Act. The cases - to which I have only given limited attention - suggest that it is also at least arguable that that prohibition extends to an award of costs with respect to any associated claims, such as Mr Roohizadegan brought in contract in these proceedings (Stanley v Service to Youth Council Inc (No 3) [2014] FCA 716; 225 FCR 357, Melbourne Stadiums Ltd v Sautner [2015] FCAFC 20; 229 FCR 221, Construction, Forestry, Mining and Energy Union v BHP Coal Pty Ltd [2016] FCA 987).
Having regard to the above, I will make no order as to costs but will provide for the opportunity for the parties to file submissions if they are advised that they should be entitled to an award of costs.
I certify that the preceding one thousand one hundred and fourteen (1114) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Kerr. Associate:
Dated: 2 October 2020
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