Sautner v Melbourne Stadiums Limited
[2014] VCC 476
•2 May 2014
| IN THE COUNTY COURT OF VICTORIA | Revised (Not) Restricted |
AT MELBOURNE
COMMERCIAL LIST
GENERAL DIVISION
Case No. CI-13-03122
| NICHOLAS SAUTNER | Plaintiff |
| v. | |
| MELBOURNE STADIUMS LIMITED | Defendant |
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JUDGE: | His Honour Judge Anderson | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 9 - 11 April 2014 | |
DATE OF JUDGMENT: | 2 May 2014 | |
CASE MAY BE CITED AS: | Sautner v. Melbourne Stadiums Limited | |
MEDIUM NEUTRAL CITATION: | [2014] VCC 476 | |
REASONS FOR JUDGMENT
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Catchwords: Employment – Employee terminated pursuant to employment contract with payment of six months’ salary in lieu of notice – Later the employer became aware of facts which it said justified the summary dismissal of the employee – Whether principle in Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359 permitted reliance upon after acquired knowledge to permit summary dismissal – Hodgson v Amcor Ltd [2012] VSC 94 not followed – Downer EDI Ltd v Gillies [2012] NSWCA 333 and Bibby Financial Services Australia Pty Ltd v Sharma [2014] NSWSC 37 followed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr W. Friend SC with Mr M. Hoyne | AJ Macken & Co |
| For the Defendant | Mr J. Bourke SC with Mr J. Forbes | Thomson Geer |
HIS HONOUR:
1Nicholas Sautner’s employment was terminated on 3 June 2013. He had worked with Melbourne Stadiums Limited (“MSL”) since June 2000. MSL is the operator of the sports stadium at Melbourne Docklands named after its major sponsor, Etihad Airlines. Mr Sautner had risen to a senior management position with MSL as Director, Commercial Business.
2On 3 June 2013, MSL’s Chief Executive Officer, Paul Sergeant, told Mr Sautner that a “review” of the company’s commercial business arm had determined that Mr Sautner’s position was no longer required and there was no suitable vacant role in MSL to which he could be redeployed.
3Mr Sautner was told that he would be paid “6 months’ pay in lieu of notice of termination” and accrued leave entitlements. He was also offered “twelve weeks’ redundancy pay and access to an outplacement services program [to] be paid upon the review and signing of a deed of release agreement”.
4Mr Sautner left his employment that day. He did not sign the proffered deed of release agreement. There was correspondence between solicitors about the return of the mobile phone Mr Sautner had been given as part of his terms of employment. MSL also sought the return of company documents in Mr Sautner’s possession.
5On 20 June 2013, MSL’s solicitors wrote to Mr Sautner’s solicitors setting out certain “additional material” which it was said had come to light since the termination of Mr Sautner’s employment. This material included that:
a.Mr Sautner had facilitated a tour of Etihad Stadium in May 2013 for representatives of a consortium, including Brookfield Johnson Controls (“Brookfield”), which was interested in bidding for a proposed new stadium in Perth;
b.Mr Sautner had breached the Australian Rugby Union (“ARU”) ticketing requirements in relation to an international rugby game at Etihad Stadium;
c.retrieval of text messages from Mr Sautner’s mobile phone had shown that he had traded tickets to events at Etihad Stadium in return for goods and services;
d.the text messages also included “inappropriate and unacceptable images and jokes”.
6As a result of this material, MSL maintained that “it is entitled to terminate your client’s employment on the basis that your client engaged in serious misconduct”. MSL’s solicitors stated that their client was entitled to rely upon the proposition in Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359 (“Shepherd”) that, in respect to the discharge of a contract by breach, “the dismissal of an employee may be justified upon grounds on which the employer did not act and of which the employer was unaware when the employee was discharged”.
7Mr Sautner issued proceedings on 19 June 2013, claiming:
a.$123,777.67, payment in lieu of notice;
b.$31,201.17, redundancy payment equivalent to 7 weeks’ salary;
c.the payment to him of a pecuniary penalty as a result of MSL’s failure to make the redundancy payment.
8By its amended defence and counterclaim, MSL:
a.denied that it is obliged to make a payment in lieu of notice or a redundancy payment because it was entitled to terminate Mr Sautner’s employment on the basis of serious misconduct;
b.stated that, even if it were not entitled to terminate the employment contract summarily, that the six months’ payment in lieu of notice provided a contractual entitlement better than the statutory minimum entitlement to redundancy pay under s. 119 of the Fair Work Act 2009 (Cth). Therefore, Mr Sautner was not entitled to a redundancy payment in addition to the payment in lieu of notice;
c.counterclaimed for the delivery up to it of all documents relating to MSL’s business, which are in Mr Sautner’s possession or control.
9The issues for determination in the proceeding are:
a.whether the “Shepherd principle” is applicable in the circumstances of this case to allow MSL to rely upon the “additional matters” as the basis for summary dismissal of Mr Sautner’s employment;
b.if the Shepherd principle applies, do the “additional matters”, either separately or when considered together, justify the summary dismissal of Mr Sautner;
c.is Mr Sautner entitled to any or all of the relief he seeks;
d.is MSL entitled to the relief it seeks by its counterclaim?
10In relation to paragraph (c), MSL’s senior counsel, Mr Bourke SC, (with whom Mr Forbes appeared), submitted that whatever the result on the primary relief sought by Mr Sautner, the issue relating to the payment of a pecuniary penalty should be deferred. I consider that this course is appropriate.
11Further, Mr Sautner’s counsel, Mr Friend SC (with whom Mr Hoyne appeared), informed me that the parties were discussing an undertaking Mr Sautner might give in relation to the return of MSL’s documents. In the circumstances, it is appropriate that this issue also be deferred for the moment.
The “Shepherd principle”
12Shepherd involved the termination of an agency agreement. The plaintiff had acted as the representative of the defendant for the sale of its products on a commission basis in Sydney and its suburbs. The agreement was terminated by the defendant on the basis that the plaintiff had “flagrantly neglected our interests”. The letter of termination gave “one illustration” which it said would “suffice”, presumably to justify the termination. In fact, there were other instances of the plaintiff’s conduct prior to the termination and about which the defendant only later became aware. The defendant sought to rely upon these matters in defence of the plaintiff’s claim for damages for wrongful termination of the agency agreement.
13At pages 377-8, Dixon J (as he then was), stated that:
“it is well established, however, that a servant's dismissal may be justified upon grounds on which his master did not act and of which he was unaware when he discharged him [authorities cited omitted]. It is true that the agreement between the appellant and the respondent does not amount to a contract of service. But the rule is of general application in the discharge of contract by breach, and enables a party to any simple contract who fails or refuses further to observe its stipulations to rely upon a breach of conditions, committed before he so failed or so refused, by the opposite party to the contract as operating to absolve him from the contract as from the time of such breach of condition whether he was aware of it or not when he himself failed or refused to perform the stipulations of the contract. ‘It is a long established rule of law that a contracting party, who, after he has become entitled to refuse performance of his contractual obligations, gives a wrong reason for his refusal, does not thereby deprive himself of a justification which in fact existed, whether he was aware of it or not’”.
14In Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 176 ALR 693 (“Concut”), the High Court considered an appeal relating to an action for wrongful termination of employment. In 1988, the employer terminated the employee’s employment without notice, although the employment contract “still had a substantial time to run” (paragraph 5). The employer defended the action on the basis that the employee had misconducted himself by, without permission, using his employer’s workers and property in the building of a house. The employer had not been aware of the employee’s misconduct when it terminated his employment.
15Gleeson CJ, Gaudron and Gummow JJ at paragraph 29 reaffirmed “the proposition of law expressed in Shepherd. The proposition that the dismissal of an employee may be justified upon grounds on which the employer did not act and of which the employer was unaware when the employee was discharged is but an application of what, in Shepherd, Dixon J identified as a rule of general application with respect to the discharge of contract by breach”.
16In Hodgson v Amcor Ltd [2012] VSC 94 (“Hodgson”), Vickery J considered a claim for wrongful termination of employment. In August 2004, the defendant employer terminated the plaintiff’s employment with effect from 1 October 2004 and agreed to make a payment in lieu of 12 months’ notice. In December 2004, the employer, by letter from its solicitors, purported to summarily and immediately terminate the employee’s employment for serious misconduct (being the employee’s collusion in illegal cartel conduct that he had been engaged in for about five years). Justice Vickery found that the employee’s superiors “well knew of [the plaintiff’s] involvement and participation in the illegal cartel conduct” (paragraph 471).
17However, in December 2004, the employer whilst having knowledge of the illegal cartel conduct, was not aware that the employee was, in concert with others, making preparations to set up a business in direct competition to that of his employer and, in the process, was concealing information from the employer.
18In relation to the employee’s involvement and participation in the illegal cartel conduct, Vickery J distinguished Shepherd and Concut on the basis that the case before him did not involve “after acquired knowledge”, as the employer, “through its senior executives, had the relevant knowledge of [the plaintiff’s] involvement in the cartel conduct at the time when it terminated his employment by giving notice to him on 11 August 2004” (paragraph 472).
19In relation to the employee’s conduct in setting up a competing business and concealing information from his employer, Vickery J found that the employer was not, in late 2004, aware of this conduct and that it was a matter which would have justified his summary dismissal as at 13 December 2004 (paragraphs 1592 and 1593).
20Justice Vickery found that the employer’s solicitors’ “letter dated 13 December 2004, which purportedly sought to dismiss [the employee] summarily, had no legal effect” (paragraph 1618). Justice Vickery said that, “having taken the step of terminating [the employee’s] contract of employment on 11 August 2004 with effect on 1 October 2004, it was not open to [the employer] to later dismiss [the employee], which it purported to do by its letter dated 13 December 2004” (paragraph 1617).
21Justice Vickery stated at paragraphs 1611 and 1612 that:
“no question arises as to whether there were any additional grounds to justify the contractual termination which were not known or relied upon by [the employer] at the time the action was taken…the Shepherd principle in its broader form, in my opinion, cannot be applied, in effect, to convert a termination undertaken on one basis, namely a contractual termination in this case, to a termination on another basis, namely a summary dismissal. This is so, even though facts have now come to light which would have justified the summary dismissal of Hodgson as at 11 August 2004. The Shepherd principle does not go so far”.
22In Cavenagh v William Evans Ltd [2012] EWCA Civ 697 (“Cavenagh”), the Court of Appeal in England had before it a set of facts very similar to the present case. The defendant employer decided that the role of the Managing Director, which the plaintiff held, was no longer viable. The employer terminated the plaintiff’s contract of employment, as it was entitled under the employment contract to do summarily, by stating that it would make all appropriate payments in lieu of the required notice period. The employer later discovered that prior to the termination, the plaintiff had been guilty of gross misconduct, having wrongly procured a payment by the employer to his pension fund of £10,000.
23The Court of Appeal’s conclusion stated by Mummery LJ at paragraph 43 was that, “The prior unknown misconduct was not a defence to the claim for payment of the debt arising from the company’s election to terminate the service agreement summarily under clause 11.5” [i.e., by payment of all relevant benefits “in lieu of the required period of notice”].
24Lord Justice Mummery said that when the notice of termination was given, “the company purported to exercise its contractual power under clause 11.5 to terminate the service agreement without notice, but with pay in lieu, and the company agreed to pay it. A debt by the company to [the plaintiff] thereby accrued. Having chosen to terminate the service agreement in that way, the company was not entitled to resile from the contractual consequences of its choice by later following the different common law route of accepting repudiation, by relying, after the termination event, on an earlier act of misconduct by [the plaintiff] of which it was unaware at the date of the termination” (paragraphs 36 and 37).
25Downer EDI Ltd v Gillies [2012] NSWCA 333 (“Downer”), was a decision of the New South Wales Court of Appeal. The plaintiff’s employment was terminated in August 2007. He was effectively required to “step down” from his position as Managing Director. A few days later, his position was formally terminated by letter with payment of three months’ salary in lieu of notice. Subsequently, it was discovered by the company that the plaintiff had borrowed for personal purposes against funds held by the company in a retained bonus account. He had later repaid the money. He had also used the company’s treasury facility to obtain short-term interest-free loans in order to purchase property. This was said to be serious misconduct upon which the company could rely in order to deny the plaintiff his entitlements upon termination.
26The plaintiff argued, supported by the statement by Vickery J in Hodgson at paragraph 1612, that the Shepherd principle “was restricted to circumstances where the act purportedly taken under the contract [i.e., the original termination on a basis which ‘cannot be justified on the ground contemporaneously relied upon’] required other justification” [i.e., the after acquired knowledge] (paragraph 133).
27At paragraph 136, Allsop P (with whose remarks both Macfarlan and Meagher JJA agreed) said:
“As a matter of principle and authority, the limitation on the principle should not be accepted. There is no reason in principle for Shepherd…to be confined to supporting as justifiable acts done under contract which are not valid without further justification from the facts not previously known. In principle, it should equally extend to adding a further basis for justification of the act if that further basis has separate relevance…Of course, whether or not the two contractual bases can operate concurrently or severally will be affected by the terms of the contract”.
28President Allsop distinguished the decision of Cavenagh on the basis that the law in Australia was stated by Mason CJ in Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 at 262 (“Sunbird Plaza”), that:
“Shepherd v Felt & Textiles of Australia Ltd stands as authority for the general proposition that a termination of a contract may be justified by reference to any ground that was valid at the time of termination, even though it was not relied on at the time and even though the ground actually relied on is found to be without substance”.
29At paragraph 139, Allsop P added the important qualification, “That said, how a contract operates both by reference to its own terms and to the general law of contract will depend upon the content and meaning of the contract”.
30President Allsop said that for the company’s obligation to pay the three months’ salary in lieu of notice and additional benefits “to be defeated would require the operation of either another distinct provision of the contract or of a principle of law cutting back or destroying an accrued contractual entitlement of [the employer]. It was this very consideration with which the English Court of Appeal was dealing in Cavenagh. Mr Cavenagh claimed moneys payable under his contract of employment when he was terminated. Known to him, but not to his employer, was the fact that he had engaged in gross misconduct that would have justified the employer in summarily dismissing him without compensation” (paragraph 140).
31President Allsop considered that the relevant clause of the employment contract (clause 4.3), by which termination payments would be denied, “should be construed both in the context of the common law, including the principle in Shepherd v Felt & Textiles, and in accordance with honest commercial common sense” (paragraph 143). This required an interpretation that the basis for denying the termination payments included any other “legally available support or justification for the termination that was effected” (paragraph 144), such as summary dismissal for “misconduct or fraudulent activity”.
32The Court of Appeal considered that the plaintiff’s “conduct was sufficiently serious to justify summary termination of his contract” (paragraph 163). In additional remarks, Meagher JA distinguished Cavenagh and Hodgson stating that, “In neither of those cases was there a clause such as clause 4.3 which affected the entitlement of an employee to enforce contractual entitlements or retain benefits received pursuant to them” (paragraph 162).
33Bibby Financial Services Australia Pty Ltd v Sharma [2014] NSWCA 37 (“Bibby”) related to the termination of a contract of employment. At a meeting on 4 February 2009 with the employer’s Managing Director and the head of Human Resources of its parent company, the plaintiff was told, “If you do not resign we will terminate your contract” of employment as the company’s Sales Director on the basis that “your conduct is unbecoming of a director”. The employee was told that “a couple of people at work…think you are aggressive”, but he was refused examples of the conduct alleged. In fact, one of the company’s sales managers had, prior to the termination, complained to the company that the Sales Director had sexually harassed him. The plaintiff was also told in the meeting, “we will pay you 75% of your special bonus and give you six months in lieu of notice”.
34In later correspondence between solicitors, the employer asserted that the employment had been terminated pursuant to clause 3.2 of the contract (termination without cause entitling the employee to a payment in lieu of notice).
35On 24 March 2009, the employer purported to give notice to the employee of “allegations of breaches of the [employment] agreement and serious misconduct…pursuant to [the company’s] obligations under clause 3.5 of the agreement”. Clause 3.5 provided a process for the employee after having been given notice, “to respond to such allegations prior to any final decision to terminate” and after the company had taken any submissions made by the employee into account. Only then could the employment be terminated “at any time without notice or any payment in lieu” pursuant to clause 3.3 of the agreement. The allegations of breach of agreement and serious misconduct did not relate to the complaint of sexual harassment of the Sales Manager. However, on the appeal, the company sought to rely on the allegation of sexual harassment to justify the 4 February termination.
36Justice of Appeal Gleeson delivered the principal judgment with which Beazley P and Barnett JA agreed in relation to all issues, save for a subsidiary matter which has no relevance to the present discussion.
37There was no issue on appeal that the matters relied upon as “breaches of the agreement and serious misconduct” as the basis for the 4 February termination “would not justify dismissal for serious misconduct” (paragraph 119).
38As to the company’s argument on appeal that it should be permitted to rely upon the allegation of sexual harassment to justify the 4 February termination, the employee submitted that:
“an election was made by [the company] to rely upon matters known to it at the time of termination which would have required it to observe the clause 13.5 process before termination for cause under clause 13.3 of the contract [and, as the company] had not complied with the clause 13.5 process, it could not later seek to justify the termination on 4 February 2009 relying on clause 13.3 for termination for cause” (paragraph 121).
39The Court of Appeal accepted the employee’s submission. Justice of Appeal Gleeson referred to Allsop P’s statement in Downer at paragraph 36 that “whether or not the two contractual bases can operate concurrently or severally will be affected by the terms of the contract” (paragraph 124).
40At paragraphs 126 to 128, Gleeson JA stated that:
“Where a promisee enjoys more than one right of termination at the time of its election to terminate the performance of the contract, it is necessary to identify whether those rights are ‘independent’ (that is, several) or ‘concurrent’. As explained by Professor Carter, the learned author of Carter's Breach of Contract (LexisNexis Butterworths, 2011) at [10-08], independent rights of termination generally arise at different times, whereas concurrent rights of termination arise if two or more rights of termination arise from the same event. Thus, in the case of independent rights of termination, a promisee who purports to terminate on one contractual basis, cannot rely upon a contractual right to terminate which would have come into existence at a later date.
In the present case, [the company] had two contractual bases to terminate [the employee’s] employment…The rights of termination under clauses 13.2 and 13.3 of the contract did not operate concurrently…The right to terminate relying on clause 13.2 was available at any time by either giving six months’ notice of termination, or electing to terminate immediately and paying six months’ pay in lieu of notice. By contrast, the right of termination for cause under clause 13.3 was subject to the condition precedent in clause 13.5”.
41Justice of Appeal Gleeson considered that “no question of election between alternate rights under the contract arose” as in circumstances where the company “had not complied with the clause 13.5 process, but elected to terminate the contract immediately by paying six months pay in lieu of notice, the right the terminate relying on clause 13.3, necessarily arose at a later date than the termination under clause 13.2” (paragraph 129).
42Justice of Appeal Gleeson stated that, for this reason and because of the decision in Downer and particular paragraphs 141 and 142 of Allsop P’s judgment, it was unnecessary to consider whether, as in Cavenagh, “there remains room for operation of the doctrine of election between alternative rights arising at the same time (in circumstances where the employer has knowledge of the facts giving rise to inconsistent rights or remedies)” (paragraph 129).
43Earlier at paragraph 115 of the judgment, Gleeson JA had noted that, “An election occurs where a person has two truly alternate rights or sets of rights and with knowledge of the facts giving rise to the inconsistent rights acts in a manner consistent only with the exercise of one of those rights and inconsistent with the exercise of the other”.
The “Shepherd” principle – conclusions and application
44I consider that the general principles which arise from these cases are as follows:
a.the “Shepherd principle” is a common law rule of general application where contractual arrangements are terminated for breach;
b.Shepherd “stands as authority for the general proposition that a termination of a contract may be justified by reference to any ground that was valid at the time of termination, even though it was not relied on at the time and even though the ground actually relied on is found to be without substance” (Sunbird Plaza at page 262);
c.the terms of the contract will affect whether or not alternative bases for termination can operate “concurrently” or “severally”;
d.if the contractual rights of termination operate severally (or “independently”), then a party terminating on one contractual basis cannot rely upon a contractual right which arose in respect of different events or circumstances and at different times;
e.if the contractual rights operate “concurrently”, then a party will usually be entitled to rely on a basis of termination although the relevant facts were not known to the terminating party at that time, provided those facts were in existence at the time of termination;
f.if a party, with knowledge of the existence of facts supporting a concurrently operating contractual basis of termination, “elects” to terminate the contract on an alternative basis, the party will not later be able to seek to justify the termination on a basis upon which it did not originally rely.
45In the present case, the relevant contractual rights to terminate Mr Sautner’s employment are found in clause 7 of the contract, which reads as follows:
“7.1 Either party may terminate this agreement by giving written notice of the duration referred to in Item 5 of the Schedule [six months] to the other party. The company may, in its absolute discretion, elect to terminate this agreement by providing remuneration in lieu of the appropriate term of notice.
7.2The company may terminate summarily this agreement immediately by notice in writing to the employee without any payment in lieu of notice if the employee:
(a) commits a serious or persistent breach of any of the terms or conditions of this agreement;
(b) commits any grossly negligent act in the course of performing the employee’s duties;
(c) commits any wrongful or dishonest act or engages in conduct, which in the reasonable opinion of the company, brings it into disrepute;
(d) commits any other act which would entitle the company to dismiss the employee summarily; or
(e) is adjudicated bankrupt or makes any composition with the employee’s creditors,
and no remuneration or compensation shall be payable beyond the time of such dismissal.
7.3On the termination of this agreement for whatever cause, the employee shall deliver to the company or as it may direct all documents, books, records, correspondence and other papers of whatever nature relating to the business of the company that may then be or that ought to be in the employee’s possession or control”.
46Mr Friend SC submitted that clauses 7.1 and 7.2 operated independently and not concurrently. He submitted that Downer was distinguishable as it stood “for the proposition that absent an express contractual term affecting an employee’s entitlement to enforce contractual benefits or retain those received, an employer who terminates an employee on notice, or by payment in lieu, can neither resist a claim for notice or recover money paid in lieu of notice by reason of an allegation that it could have dismissed the employee for misconduct”.
47In Downer, (clause 5) the relevant termination clause read as follows:
“4.1 Your employment under this agreement may be terminated in any of the following ways:
(a) …
(b) by the company giving you three (3) months’ notice in writing or payment in lieu thereof; or
(c) in the event of your misconduct or fraudulent activity, by the company notifying you that your employment is terminated with immediate effect.
…
4.2In addition to the payment in lieu of notice which may be made pursuant to clause 4.1(b) you will be paid an additional benefit…
4.3The termination payments referred to in this clause 4 will not be payable in any case where the termination is effected under clause 4.1(c) due to your misconduct or fraudulent activity.”
48President Allsop at paragraph 144, and Meagher JA at paragraphs 153-162, construed clause 4.3:
“where it uses the word “effected” as including in its meaning effected as a matter of law, that is, by reference to the legally available support or justification for the termination that was effected…The acting to terminate otherwise than under clause 4.1(c) does not disentitle or debar [the company], if it later discovers facts amounting to serious misconduct, from relying on them to assert that the termination was thereupon justified and took effect in law thereupon (thus was ‘effected’) as one based on the found misconduct…In some circumstances, reading clause 4 as a whole, the moneys paid on 9 August [by electronic funds transfer (paragraph 33)] were not liable to be paid, were not payable, by reason of clause 4.3”.
49Special leave to appeal from the decision in Downer was refused by the High Court (Gillies v Downer [2013] HCA Trans 81). The High Court was satisfied that the Court of Appeal’s construction of clause 4.3 was “not attended with sufficient doubt”.
50Mr Friend SC sought to rely on Bibby as a case which, like Downer, depended on “the content and meaning of the contract”, although the interpretation adopted in Bibby favoured the employee whose employment had been terminated.
51The Court of Appeal in Bibby said that a basis for terminating for cause under clause 13.3 was not available as justification for the original termination if the relevant facts were later discovered, because termination under clause 13.3 required compliance with the clause 13.5 process, which had an “independent” or “several” operation.
52Mr Friend SC relied upon the decision of Vickery J in Hodgson and the English Court of Appeal decision in Cavenagh. Justice of Appeal Meagher in Downer at paragraph 162 distinguished both of these cases on the basis that, “In neither of those cases was there a clause such as clause 4.3 which affected the entitlement of an employee to enforce contractual entitlements or retain benefits received pursuant to them”.
53President Allsop in Downer, at paragraph 136, rejected Vickery J’s conclusion in Hodgson at paragraph 1612 that, “The Shepherd principle does not go so far [as to] convert a termination undertaken on one basis, namely a contractual termination in this case, to a termination on another basis, namely a summary dismissal…even though facts have not come to light which would have justified the summary dismissal of [the employee]”.
54President Allsop stated that, “As a matter of principle and authority, the limitation on the principle should not be accepted”, giving his reasons at paragraph 136 (which I have previously quoted), which finish with the critical words, “Of course, whether or not the two contracting bases can operate concurrently or severally will be affected by the terms of the contract”.
55Similarly, with Cavenagh, Allsop P identified the case as limiting the Shepherd principle “to supporting otherwise unjustified acts”, and said that in Australia the law involved “the wider expression of the principle in Sunbird Plaza”. President Allsop again restated the qualification, “That said, how a contract operates by reference to its own terms and to the general law of contract will depend upon the content and meaning of the contract” (paragraphs 137-139).
56In Hodgson, the employment contract provided in clause 13.1, as follows:
“The company may terminate this contract at any time:
…(b) for any reason whatsoever by providing 12 months’ notice to the employee. The company:
(i) may, at its option, elect to make payment in lieu of such notice to the employee…”
57This is the only relevant extract of the employment contract quoted in the judgment (at paragraph 393). The quotation excludes clause 13(a) and sub-clauses (if any) after clause 13(b)(i). The company in Hodgson had, in August 2004, purported to terminate the employee’s employment under the contractual provisions, with a payment in lieu of 12 months’ notice.
58However, the company’s solicitors’ letter dated 13 December 2004, after the employee had commenced proceedings for wrongful dismissal, notified the employee of the company’s decision to terminate his “employment with immediate effect”. This was said to be on the basis that, in the statement of claim filed in the proceeding, the employee had admitted having “been a party to systematic and organised collusive conduct in breach of Part IV of the Trade Practices Act 1974 (Cth)” which, it was said, breached the employee’s “obligations under his employment contract [and] also constitutes serious misconduct which warrants summary termination of that contract” (paragraph 439). The notice was apparently given by the company pursuant to its common law rights to discharge the employment contract for a serious breach.
59As previously mentioned, the stated ground (collusion in illegal cartel conduct) was unsuccessful, because Vickery J was satisfied that the company had relevant knowledge of the conduct when it purported to terminate the contract in August 2004. However, Vickery J was satisfied that the company had, at a later date, acquired knowledge of conduct (the preparation, with others, to set up a competing business and the concealment of information from the employer) which would have justified summary dismissal as at December 2004.
60It was in respect of this latter conduct, that Vickery J found that the Shepherd principle had no application. Essentially, the company could not rely on the after acquired knowledge of facts “which would have justified the summary dismissal of [the employee] as at 11 August 2004. The [Shepherd] principle does not go so far” (paragraph 1612).
61I respectfully find it difficult to agree with Vickery J’s conclusion, particularly in light of the closely reasoned analysis by Allsop P and Meagher JA in Downer and by Gleeson JA in Bibby. I see no reason why the right of the company to terminate the employment contract pursuant to clause 13(b), and the right to terminate the contract summarily for misconduct at common law, should be regarded as “independent” rather than “concurrent” rights. In these circumstances, the company’s after acquired knowledge could ordinarily be relied upon, if it justified a ground of termination that was valid at the time of termination. No question of “election” would arise, as at the time of the purported termination, the company did not have the relevant knowledge.
62In the circumstances, I consider that I am bound to follow the decisions of the Court of Appeal in New South Wales in Downer and Bibby which seem, with respect, to be consistent with High Court principle and authority. I must decline to follow the purported limitation on the Shepherd principle. This case, therefore, stands to be determined by an analysis of whether the provisions of Mr Sautner’s employment contract either exclude the payment in lieu and any other benefits because there are concurrent rights of termination (as in Downer) or allow them to be paid because the contractual basis for the payment of those benefits should be regarded as a provision which operates “severally” (as in Bibby).
63Clause 7 of Mr Sautner’s employment contract provides the company with two rights of termination:
a.by clause 7.1, with written notice or payment in lieu of notice;
b.by clause 7.2, summarily, without any payment in lieu of notice upon any of the grounds specified in sub-clauses (a) to (e) and with “no remuneration or compensation…payable beyond the time of such dismissal”.
64Sub-clauses (a) (“serious persistent breach of…this agreement”), (c) (“wrongful or dishonest act” or conduct bringing the company into disrepute) and (d) (“any other act which would entitle the company to dismiss the employee summarily”) would appear to articulate the company’s rights at common law to determine the employment contract.
65On the face of clause 7, it appears that the two rights would operate “concurrently” rather than “independently” or “severally”. In these circumstances, the Shepherd principle would ordinarily apply and, at the date of termination (3 June 2013), the company might seek to justify the termination of Mr Sautner’s employment by reference to a ground that was valid at that time, although not relied upon then and of which the company did not become aware until later.
66Mr Friend SC submitted that clause 10 of Mr Sautner’s employment supports the view that the rights under clause 7.2 are “independent” of the rights of termination under clause 7.1. Clause 10 reads as follows:
“10. Disputes
Any dispute concerning this Agreement or its interpretation shall be brought to the attention of the Chief Executive Officer of the Company. If the parties cannot agree, the matter is to be referred to the Direction of Human Resources for reconciliation”.
67Mr Friend SC submitted that:
“Although the clause is not on “all fours” with the clause in Bibby, clause 10 still has the capacity to condition or limit the exercise of the contractual rights to terminate for cause. Further, a termination under clause 7.1 could not give rise to a dispute under clause 10 whereas a termination for cause under clause 7.2 plainly could. That being so, the logic in Bibby applies. The right to terminate for cause was independent of the right to terminate on notice. This supports the reasoning in Hodgson. The defendant, having acted to terminate on notice cannot seek to act on an independent right to terminate for cause after the termination has been effected. In addition, upon the exercise of that right, by reason of the plaintiff’s redundancy an entitlement under the FWA [Fair Work Act 2009 (Cth)] arose”.
68In my view, clause 10 might equally have application to a termination under clauses 7.1 and 7.2. There is the potential for dispute under both clauses. If clause 10 were a “condition precedent” to the operation of clause 7, there would be “no question of election between alternative rights under the contract” (Gleeson JA in Bibby at paragraph 129). I do not consider that to be the case in relation to clause 7, simply because of the possible operation of clause 10.
69Accordingly, MSL is entitled to rely upon the grounds for termination set out in the “additional material” referred to in its solicitors’ letter dated 20 June 2013. It is necessary to consider whether the evidence of these matters justifies the summary dismissal of Mr Sautner.
Whether Mr Sautner’s conduct justified summary dismissal
70Mr Sautner commenced employment at Etihad Stadium in June 2000. As Director, Commercial Operations, he was responsible for the commercial aspects of the company’s operations including commercial arrangements with the hirers of the stadium for events and the suppliers of goods and services, and for all ticketing matters.
71In cross-examination, Mr Sautner agreed that:
a.the reputation of the venue was very important and can be the key to attracting events;
b.meeting the clients’ contractual obligations, including ticketing obligations, was important;
c.being one of the six members of the Chief Executive Officer’s executive management team, required a high standard of probity as well as loyalty to the company and to the CEO;
d.an executive staff member should not use his or her position with the company for personal gain.
72Mr Sergeant said in his evidence that:
a.Mr Sautner was a senior manager who operated with substantial independence, and therefore a high degree of trust was reposed in him.
b.the reputation of MSL was of paramount importance;
c.the integrity of ticketing sales was important and a key element in relations with customers;
d.if the integrity of the ticketing system was not maintained, this was “potentially devastating”.
Brookfield consortium tour
73In 2012, the Western Australian Government reaffirmed its commitment to “delivering a new major stadium for Perth … to be ready for the start of the [football] season in 2018”. The Project Definition Plan dated September 2012 referred to Etihad Stadium in a number of places as the “benchmark” for the proposed Perth Stadium. It was apparently proposed that an expert advisory panel should be set up to provide project management services for the project and that the group should be called the “knowledge team”. Mr Sautner was invited to participate in such a group by a consultant, Appian.
74Mr Sautner said that he obtained permission to do so from the former MSL Chief Executive Officer, Mr Ian Collins. Mr Sautner said that Mr Collins told him that it was an “outstanding opportunity for Mr Sautner’s personal development”. Later, when asked for clarification of the matter by Mr Sergeant, Mr Sautner wrote on 31 January 2013 that, “Ian Collins was aware of my potential involvement with the Knowledge Team and expressed no objection to my involvement”.
75At a meeting on about 11 December 2012 of the CEO’s executive team, Mr Sergeant informed the meeting that MSL was likely to be involved with a consortium bidding for the Perth Stadium project and therefore there was the potential for conflict if anyone from MSL was involved with another group. He enquired whether any of the MSL managers had any involvement with the project. Mr Sautner disclosed that he had been approached three months earlier to use his name as part of the knowledge team for the project. Mr Sautner had not, at that time, assisted in any way with the knowledge team. He would have been paid for his participation. Mr Sergeant asked Mr Sautner to put his role with the knowledge team in writing. Over the next week or so, Mr Sautner and Mr Sergeant had discussions about the matter. Mr Sautner said that he obtained legal advice.
76On 18 December 2012, Mr Sautner wrote a letter to Mr Sergeant which included the following passages:
“I confirm that, under the management of Ian Collins, I had an approach from the Appian Group to be part of a ‘knowledge team’ which would assist the group in its bid, and if successful, its performance of project management services for the new Perth Stadium. I had previously rejected an offer to the CEO of the Western Australian Football League and the group was aware of that and my role at Etihad Stadium. I agreed to the role for my own personal development, to gain external experience and on condition that there was no conflict with my role at Etihad Stadium. I declared this involvement at our recent meeting.
There has been no job description provided for the proposed role, no contract signed and no remuneration paid. Accordingly, there is no involvement beyond my expression of interest in being involved in such a role provided it did not conflict or interfere with my role at Etihad Stadium. I would like very much to remain involved subject to your consent and approval. If you are prepared to discuss this option, I am happy to do so …”.
77Mr Sergeant replied by email on 25 January 2013, which reads as follows:
“One of the topics we chatted about earlier in the week was the stadium project in Perth and I just want to follow up on the discussion so that it can be boxed off and put to bed as you asked me to write to you to confirm that MSL will not agree to you being involved with their knowledge team.
Previously at one of our executive team meetings towards the end of last year, I informed everyone of our potential involvement with one of the consortia and asked if anyone was or had been involved with this or any other industry interest outside of work. You quite rightly declared that you had received an approach from the knowledge group responsible for the new stadium development in Perth and subsequently provided me with the attached letter. As I understand it, this was on a personal level and did not involve MSL. What I am not clear about is whether the previous CEO gave his approval or not so can you clarify?
Given that the stadium’s briefing document makes numerous references to Etihad Stadium and we are in discussion with one of the consortia about possibly being part of that group, any involvement you might have with the Perth Stadium knowledge team represents a potential conflict of interest with our business. Additionally, the IP of MSL is extremely sensitive and valuable and should not be shared with such a group unless there is a formal arrangement in place between the two organisations. Therefore, I ask that you have no involvement with the Perth Stadium knowledge team or any other entity involved with this project or any other similar project. I am sure you appreciate our position and I know you will abide by this request”.
78In May 2013, Mr Collins phoned Mr Sautner to ask him whether he would arrange a tour of the stadium for the Brookfield consortium, which was interested in bidding for the Perth Stadium project. The purpose of the tour was to assist them in the bid. Mr Collins was involved in the Brookfield consortium as an advisor. Mr Sautner agreed and Mr Collins said that Phil Coles from Brookfield would contact him. Mr Sautner denied that he had agreed to conduct the tour to “deepen” his relationship with Mr Collins.
79In an email dated 13 May 2013, Mr Coles asked Mr Sautner if it were possible for Brookfield “to have two visits to the stadium, the first would be a general tour from a design perspective for 7-8 people, the second for 2-3 people would be through a game day to focus on services and operation”.
80Mr Sautner made arrangements for the “game day” visit on 19 May, when he said he would be “the senior manager for that game so I can host you”. Mr Coles named the four persons who would be attending from Brookfield, and asked that “ideally we would like to be with the Facility Manager or in the back of house areas from when the site begins preparation until it closes so we can gain insight into the operation of the stadium rather than watching the game”.
81The “general tour” was arranged for 23 May. Mr Coles notified Mr Sautner by email on 16 May that the attendees would include five persons from Brookfield and four consultants in the specialties of mechanical, electrical, fire and hydraulics. The email specified the “areas of interest” with which Brookfield was concerned, including for the specialists. On 22 May, Mr Coles emailed through a list of “questions we have for your [Facilities] Manager [which] are really around understanding the demands on a stadium so we can accurately estimate the maximum utilities demand”.
82Mr Sautner said that Mr Coles had told him that Brookfield wanted “detailed information” but Mr Sautner had told Mr Coles that he was not permitted to give it. He verbally confirmed this at the briefing on 23 May before the tour with Paul Brown. Mr Sautner said it was unusual for tours to be conducted over two days, although he had conducted tours of large groups of technical people. Mr Sautner organised the tour without telling Mr Sergeant. He knew that the tour was to assist Brookfield with their bid although he did not regard arranging the tour as a breach of Mr Sergeant’s direction in the email dated 25 January. Mr Sautner said that he did not know that by mid-April 2013 a short list of tenderers, including Brookfield, had been announced.
83Mr Sautner said that at the senior managers’ meeting in the week before the tour he had, in accordance with standard practice, read to the meeting his diary entries for the following week. These included references to the two inspections. The diary was retained by MSL after Mr Sautner’s employment was terminated. Mr Sergeant said in evidence that the references were to inspections by Mr Coles and not by Brookfield. Mr Sautner agreed that he had not referred to Brookfield by name.
84The “game day” inspection was apparently attended by only three Brookfield representatives. Mr Sautner had, in accordance with standard practices, submitted an application for four tickets (apparently by computer) on 15 May in the name of “Phil Coles” of “Brookfield Johnson Controls”, for the purposes of a “site inspection”. MSL had security systems in place which enabled it to monitor the occasions on 19 May when each of the three tickets used was scanned at the stadium and the occasions Mr Sautner used his security pass to gain access to various parts of the stadium.
85The relevant records showed (with Mr Sautner’s evidence of the locations):
1. Three guest tickets:
11.34am, “initial entry” to stadium;
1.01pm, “initial entry” to the Medallion Club.2. Sautner security pass
11.23am, “reception reader” [leaving reception to lift lobby];
11.41am, “ECR entry” [car park, energising control room];
12.09pm, “A21 Comms Rm 1 Rd” [communications room adjacent to the northern change room].86Mr Sautner said that he could not recall why he went to the energising control room. He said that he would have taken the Brookfield representatives to the communications room (as an area of interest) whilst taking them to their seats in the Medallion Club.
87On 19 May, Mr Sautner said he thought it was a good idea to take the group to the communications room, although he did not have any information to assist them. Mr Brown said that in the communications room confidential information could be obtained “if the server were interrogated”; otherwise confidential information could not be obtained “just by looking”. Mr Sautner said that he did not need to use his security pass to enter or exit the Medallion Club. Mr Sautner said that essentially all he did that day was to take the Brookfield group to their seats in the Medallion Club. The game started in the early afternoon.
88On 23 May, MSL’s Facilities Manager, Mr Paul Brown, accompanied Mr Sautner and the Brookfield group for part of the tour. As they were about to embark on the tour, Mr Sautner and Mr Brown ran into Mr Sergeant outside his office. Mr Sautner said that he told Mr Sergeant they were going to take a group on a tour of the facility.
89The security pass records for Mr Sautner and Mr Brown show that the following areas were visited [with Mr Sautner’s and Mr Brown’s evidence of the locations]:
9.11am (Sautner) L1 concourse entry [on the way to pick up group];
9.18am (Sautner) passenger lift number 1;
9.18am (Brown) passenger lift number 2;
9.43am (Brown) L4 Diamond Club [Medallion Club];
11.12am (Brown) passenger lift number 8 [goods lift];
11.14am (Sautner) A29 MFB entry [car park];
11.21am (Brown) L1 VIP internal door [Mr Brown apparently left the tour at about this stage];
11.26am (Sautner) A21 Comms Rm 1 [communications room];
11.34am (Sautner) Media Centre ring road ent;
11.35am (Sautner) Media Centre internal ent;
11.35am (Sautner) Media Centre tribunal ent;
11.36am (Sautner) Media Centre internal ent;
11.36am (Sautner) Media Centre tribunal ent;
11.48am (Sautner) LB2 ECR entry [car park].
90Both Mr Sautner and Mr Brown said that on 23 May:
a.they did not tell or show the Brookfield group any “confidential information” and Mr Sautner said that he had told the group at the start of the tour that he and Mr Brown could not divulge to them matters which were confidential. He said that on the tour that day “no confidential or sensitive information was disclosed”;
b.during the tour photographs were taken;
c.they readily answered questions;
d.they knew that Brookfield was part of a consortium bidding for the Perth Stadium and that the tour was an information gathering exercise designed to assist them with their bid;
e.Mr Collins’ knowledge of the operations of Etihad Stadium was greater than Mr Sautner’s, although Mr Sautner and Mr Brown held a lot of information about Etihad;
f.Mr Brown said that Brookfield may have obtained information on the tour that was not in the public domain.
91On 24 May, Mr Sautner took a five minute phone call from Mr Collins. They discussed that the tour had taken place the previous day. Mr Sautner said that after the tour Mr Coles contacted him for more information but he had declined to provide it. Mr Coles tried without success to phone Mr Sautner on 13 June 2013. On 14 June 2013, the security pass records for Sautner and Brown were analysed and it was reported to Mr Sergeant that “limited movement” was shown on both tour days. Mr Sautner said that he had probably conducted over 100 tours of the stadium in his 13 years with MSL including tours by other stadium operators, who were competitors of MSL.
92Mr Brown said that he conducted tours for two other consortiums bidding for the Perth Stadium. On 25 March 2013, he was asked by Honeywell be part of a tour and on 1 May 2013 he had facilitated a tour for Oricon. Mr Brown said he was encouraged to conduct tours and would not have done so if he had been told not to. In his evidence, Mr Sergeant said that during MSL’s investigations of the Brookfield matter, Mr Brown had been questioned by another MSL employee. Mr Brown’s evidence at the trial was consistent with the responses he had given when interviewed during the investigations in 2013.
93Conducting tours of the stadium was one of Mr Sautner’s responsibilities. He said he conducted tours “almost daily” and that “every tour was customised”. Tours were undertaken for other stadium operators and Mr Sergeant had promoted the participation by MSL executives in the Venue Managers Association. Mr Sautner had been a member of the association for 13 years. Membership was mandatory for executives of MSL. When Mr Sautner travelled, including overseas, he undertook tours of other stadiums. Mr Sautner said that during the tour by Brookfield they were only taken to places that he had “numerous times taken people to”.
94Mr Sergeant said that he had encouraged the exchange of information between the venue managers. When asked whether it was usual in the industry for one stadium operator to show another around, Mr Sergeant replied, “It’s not unusual. Depends where you show them”.
95On 17 June 2013, Mr Chris Charleson, the Chief Financial Officer of MSL, spoke by phone with Mr Tom Roche, the project director of West Stadium (the consortium of which Brookfield was part). In an email that day, Mr Charleson wrote to Mr Roche, “As we outlined on the call we are extremely concerned that material confidential to our business may have been passed to your consortium in an unauthorised manner”. In the email correspondence that followed over the next two days, MSL requested confirmation of the following matters:
a.“Whether there was any commercial arrangement between Mr Sautner and Brookfield Multiplex or any associated entity? Specifically was Mr Sautner paid any wages or service fees or any other form of benefit …?”;
b.“Was any information passed to Brookfield in respect of requests made before or after the site visits to Mr Sautner or any other employee of MSL?”.
96Mr Roche responded as follows:
a.“There was never any commercial arrangement … Nick [Sautner] has received no benefit of any kind (including remuneration) from anyone in our consortium”;
b.Brookfield “received no information from Nick or anyone else from your organisation either before or after the site visit”. This specifically included information from Paul Brown;
c.there was an offer to request any members of the consortium who had taken photos on the visit, to delete them.
97Mr Sergeant said that in December 2012, Mr StephenMcDonough of Capella Capital, on behalf of the Brookfield consortium, had wished to involve MSL in their bid for the Perth Stadium so that they could “tap into our expertise and brand name”. Mr Sergeant said that he had raised the issue of MSL’s involvement in a consortium for the Perth Stadium with his executive team on about 11 December 2012.
98The involvement is reflected in email correspondence between Mr Sergeant and Mr McDonough between 10 and 22 December 2012. The two had lunched in the week before 10 December. In an email on 10 December, Mr McDonough set out “some ideas on how we could engage with you for the project” for “10 business days of work” at “a fee of $4K/day, with a $8K/day success fee”.
99Mr Sergeant responded by stating that, “I need to understand what role we would play in the consortium post the decision if there was to be a successful outcome”. Mr McDonough replied that, “We could get you involved in the design – ie reviews, feedback etc - this would probably go for 6-9 months post financial close. The state will be seeking an operator at some point, which is independent from the project, but we would be happy to assist if you were interested in looking at that”.
100Mr Sergeant responded on 22 December. He referred to his belief that “the use of our name, expertise and IP plus my own personal reputation bring huge credibility and value to your consortium”. He referred to the fact that “a former high ranking official of Etihad Stadium [presumably Mr Collins] is paying a key role within one of [the consortium], hence adding credibility to their bid”.
101Mr Sergeant continued, “To cut to the chase, if there is no ongoing role for us should the consortium be successful then we shall be unable to assist by becoming involved with the bid … I think it would be useful for you to discuss the potential for an ongoing operator’s role with others in the group so that you can come back to me with a more considered position. I’d be delighted to get involved but will understand if this is not to be the case”. There were no further communications between MSL and that consortium. Mr Sergeant in his evidence did not agree that the letter indicated that MSL had no interest in taking part in the consortium’s bid. He considered that he and Mr McDonough were still “in discussion”.
102Mr Sergeant said that after having told Mr Sautner of the potential involvement by MSL with a consortium, and discussing Mr Sautner’s personal position, he issued a written direction. Accordingly, he was “horrified” to learn of the Brookfield tours in May 2013. He considered that Mr Sautner had “deliberately” gone around him and “defied his direction”. By disclosing information to Brookfield, Mr Sautner was acting as an adviser by providing help and advice. Mr Sergeant said that “anything to do with the running of the stadium…was extremely sensitive and valuable”.
103Mr Sergeant said that no disciplinary action had been taken in relation to Mr Brown as he was not aware of the management team discussions. With regard to Mr Sautner, if Mr Sergeant had known of the Brookfield tours earlier, he would have dismissed Mr Sautner.
104Mr Sergeant said that he had authorised a tour of Etihad Stadium by Honeywell. Honeywell was involved with one of the Perth Stadium consortiums and, although Honeywell had a long term commercial arrangement with MSL in relation to Etihad Stadium, that arrangement was in no way related to the Perth Stadium project. Mr Sergeant said that Honeywell, despite wanting a tour of Etihad Stadium, “knew everything about the venue”.
Australian Rugby Union (ARU) – 2013 Lions Tour
105The second of three Tests between the Australian Wallabies and the British & Irish Lions was to be played at Etihad Stadium on Saturday 29 June 2013. It was expected to be a very popular event, as had been a similar test at the stadium in 2001.
106The event was governed by an agreement dated 31 July 2010 between ARU and MSL. The agreement was negotiated by Mr Sautner on behalf of MSL, in his role as commercial manager. The agreement provided that MSL undertook “not to issue more than eight venue tickets to any one person for business use or personal use, without the consent of the ARU”. In relation to the Lions Test, a limit of four tickets per person applied. Tickets would only be available through Ticketmaster to Australian residents.
107The ARU had a very strict policy on tickets and sought to enforce the policy by obtaining details of ticket sales from Ticketmaster in order to compare names and addresses to uncover multiple ticket purchases by individuals. This process applied to other events involving the ARU apart from the Lions Tour matches.
108The venue agreement with ARU also provided that MSL’s Medallion Members and Diamond Club Members’ tickets, and any other tickets purchased by MSL “are not for resale (resale includes providing exchange or disposing of the ticket for cash contra or any value)”.
109MSL has a written ticketing policy, apparently adopted in 2012 when Mr Collins was CEO. It provides the “terms and conditions” upon which tickets for certain events at the stadium would “be made available to staff for their personal and business use”, upon written request being made in accordance with the procedure set out in the policy. The policy provided that “all ticketing must be obtained as per these terms without exception. Any non-compliance will be considered a serious breach of terms of employment”.
110Mr Sautner said that the policy did not apply to general managers. For full-time staff of MSL, the policy limits the number of tickets “in the calendar year for their personal use” to a “maximum of 50 tickets”. The limit for managers was 100 although Mr Sautner said that his responsibility for commercial operations entitled him to an “unlimited” number of tickets. It appears however that Mr Sautner generally complied with the written procedure for obtaining tickets. MSL produced Mr Sautner’s application for the four tickets for Mr Coles of the Brookfield consortium on 19 May 2013, which complied with the procedure in the Ticketing Policy. No other applications were put in evidence by MSL.
111 The following issues arise in relation to the tickets for the Test:
a. Mr Sautner’s purchase of four tickets for Mr Harry Horsley;
b. Mr Sautner’s purchase of a total of 36 tickets for the event;
c. the purchase by Mr Sautner of “family tickets”.
112 Mr Sautner had, in December 2012 and January 2013, been in contact with Mr Harry Horsley, Sales Manager – Global for Manchester United Soccer Club. The Club had played an exhibition match in Sydney in December 2012. Mr Sautner had given Mr Horsley a tour of Etihad Stadium and had made an arrangement to meet Mr Horsley in London when Mr Sautner would be there in March 2013.
113 On 30 January 2013, Mr Horsley emailed Mr Sautner asking if he “could buy four tickets to the Lions Test” and offering to provide his credit card details. He later clarified what he wanted, as four adult silver tickets. Mr Sautner sent on the request to Mr Sergeant asking, “Are you happy for us to facilitate the…request from our Medallion guest tickets?”. Mr Sergeant replied, “No, not yet. These tickets are going to be in huge demand. We need to create a holding list and then prioritise once we have focused some time and attention on the matter”.
114 On 1 February 2013, Mr Sautner wrote to Mr Horsley stating, “At this stage the venue doesn’t have an allocation. However, there is a public onsale on February 18 and I will do my best to access tickets on your behalf on this date. We may indeed be allocated some venue tickets after they go on sale but this is a risk that I’m not willing to take”. On 12 February he wrote again, “I believe that ARU has a ticket limit but I will do my best”. On 18 February, he told Mr Horsley, “I have only charged your charge [card] for 50%. Four tickets have been secured”.
115 The tickets Mr Sautner had secured were as part of 12 tickets he purchased on 18 February 2013. These were three family tickets which entitled the ticket holder entry for two adults and two children, or one adult and three children. The tickets were purchased through Ms Sadie Wight, one of MSL’s two ticketing managers. Ms Wight said that on 18 February 2013, Mr Sautner came to her office and asked to buy three family tickets which he paid for with three separate credit cards; his own, his girlfriend’s and Mr Horsley’s. Ms Wight said she knew it “wasn’t within the rules”, but she processed the tickets because she “was asked to by my manager”.
116 Mr Sautner said Ms Wight could have said “no” to his request. He said that he was aware that his actions breached the ARU ticketing policy but he said that the ARU was aware that “this happens”. Later, he agreed to the suggestion that his purchase of more than four tickets was a “flagrant breach of ARU ticketing rules”. He said, however, that he would never have jeopardised MSL’s relationship with the ARU.
117 On 1 May 2013, there was a second release of tickets as all the tickets for the event had not been sold. Mr Sautner obtained “six sets of family tickets totalling 24 tickets” through Ms Wight. On this occasion, two sets were processed under the names of Mr Sautner and his girlfriend, and two further sets in the name of Mr Sautner’s flatmate, Mr Barclay Dixon.
118Ms Wight said she again processed the tickets because Mr Sautner was her manager. Ms Wight said Mr Sautner asked her if she could print the tickets without names on them. However, Ms Wight put the credit card holder’s name in each transaction. Ms Wight had held the position as one of MSL’s two Ticketing Services Managers for 14 years. At different times, including during the early part of 2013, she reported to Mr Sautner. Ms Wight had 15 years’ previous experience with ticket agencies.
119 During March, April and May, there were email exchanges between Mr Sergeant and his executive team about requests for tickets to the event and how the limited number of available tickets would be allocated. On 26 May 2013, Mr Sergeant rejected Mr Sautner’s request for complimentary tickets for three persons, although he noted, “I will be happy for them to purchase tickets if they are available”.
120 The sale of the 36 tickets was discovered by MSL in mid-June after Mr Sautner’s employment was terminated. On 17 June, Mr Sautner was informed that the tickets had been cancelled and his money was refunded. Mr Horsley was offered the opportunity to purchase four of MSL’s “right to buy” tickets.
121Mr Sergeant said that when he learned that one of his senior managers had acquired 36 tickets to the rugby test match, he was “horrified”. If he had been aware at the time he would have dismissed Mr Sautner. He said there was a risk of “severe reputational damage” if it had become known and that this was “not a good look”. As a consequence, he had written to Mr Tony Harris, ARU’s Senior Manager Event Operations. Mr Sergeant said that no disciplinary action had been taken in relation to Ms Wight’s sales of the 36 tickets to Mr Sautner.
122 On 13 June 2013, Mr Sergeant wrote to Mr Harris at ARU notifying him that the cancellation of Mr Sautner’s tickets and the alternative arrangements for Mr Horsley were proposed as a result of the “unauthorised purchase” of the tickets “by one of our former employees, Mr Nicholas Sautner whilst in our employment”. Mr Harris responded, ”Thanks for the detailed response and we appreciate the manner in which the Stadium handled this unfortunate issue”.
123 Mr Sautner said in evidence that he did in fact attend the match and the pre-match lunch with his mother as a guest of Mr Ian Alker, the General Manager, Operations of ARU, and Mr Tony Harris’ direct superior. Mr Sautner said that Mr Alker had told him that he had not known about the cancelled tickets, but when he had found out he had tried to reinstate them. Because of his relationship with Mr Alker, Mr Sautner considered that there would be no issue with the purchase of the additional tickets. Mr Sautner said that if he had contacted ARU directly when purchasing the tickets, Mr Alker would not have had an issue with him purchasing the number of tickets he did.
124 On discovery, the 36 tickets were produced by Mr Sautner. On two of the tickets, the name, the fact that they were “bronze” tickets, the reference to them being “family” tickets and the price were blacked out. It was suggested by Mr Bourke SC to Mr Sautner that these were the tickets intended for Mr Horsley and, as with the email referring to Mr Horsley’s credit card only being charged 50%, were attempts to mislead Mr Horsley that he had full price adult silver tickets and not concession family bronze tickets. Mr Sautner denied these suggestions.
125 When Mr Sautner received the tickets in the mail in late May, he said he crossed out his girlfriend’s name on two of her tickets as she was not going to attend the game. Mr Sautner said that he was intending to pass her tickets to Mr Horsley’s brother who would be picking them up. Mr Sautner said that he had intended that Mr Horsley would use two of the “adult” components of the set of family tickets he had purchased as he had a number of children who would be attending the game and would be using the “children” components of the tickets. He said there were “numerous” families who were interested in the tickets, including Sandringham Football Club supporters who had children.
126 Mr Sautner said he bought “family” tickets because he “wanted to use two adult tickets from his family tickets” for Mr Horsley. He charged Mr Horsley 50% because Mr Horsley had given Mr Sautner “great service” and usually Mr Sautner would have been able to “get complimentary tickets” for Mr Horsley.
127 The evidence in relation to the checking of family tickets at the turnstiles was as follows:
a. “There is no trigger in the scanning system to identify which tickets are adult and which are concession” (email dated 13 June 2013 from Mr Sergeant to Mr Harris);
b. Mr Sautner said that a monitor above the turnstile shows, as a ticket is scanned, that it is a family pass and staff at each gate monitor that fact;
c. Ms Wight confirmed Mr Sautner’s evidence that there were monitors above the turnstiles, so that “if the four ticket holders arrived at the one time, you could tell if the tickets were being misused”.
Bartering tickets for goods and services
128Membership of the Medallion Club provides access to all sports events at the stadium and priority for other events. The club has over 5,000 seats available for the general public to purchase, on licence, at an annual cost of $5,000. Each year, a number of club memberships remain unsold. Although each Medallion Club member can purchase unlimited guest passes for events, there are always empty seats.
129Mr Sautner said that MSL had a policy of attempting to maximise attendance at events as this ensures the attractiveness of Medallion Club membership and increases takings from catering and other revenue sources enabling MSL to “leverage” better deals with promoters and suppliers.
130Accordingly, at events spare seats are available to staff upon written application, up to 50 tickets per full-time staff member or 100 for executive staff, although Mr Sautner said that he had “no limit” to the number of tickets he could obtain. There was “absolutely no restriction” as to whom the tickets could be given. MSL paid Fringe Benefits Tax in respect of ticket allocations.
131Mr Sautner had been provided with a mobile phone by MSL. He was required to hand back the phone after his employment was terminated. MSL then arranged for the phone to be forensically examined and the text messages Mr Sautner had deleted before returning the phone were recovered.
132The recovered text messages include the following exchanges which were relied upon by MSL as grounds for summary dismissal:
a.On 7 May 2012, from John Taranto, a butcher:
“Hi Nick, I’m sorry to tell you mate that I’m selling my shop and won’t be able to continue our deal. I’m trying to settle and be out by Friday so if you can make it in this week I’ll save you some cutlets.”Mr Sautner said that the butcher had provided trays of meat as fundraisers for the Sandringham Football Club, for which Mr Sautner had played for a number of years.
b.On 8 May 2012, between Mr Sautner and Mark Dorian, a locksmith:
Dorian – “Hi Nick, your place is all done. Front door lock and electric strike went well …” Sautner – “Thanks so much. How much do I owe you?” Dorian – “Don’t worry mate, I’ll just have to get to more footy games.” Sautner – “Hi Mark, thanks so much for completing the locks. Can you please supply your address and I will post your two Medallion tickets for State of Origin … Nick.” c.On 5 and 11 July 2012, between Mr Sautner and Darian Wilson:
Sautner –
“Hi Darian, thanks again for another voucher. What did you think of the show? Just wondering if you could help me with a battery for a BMW325I 2007 please. Also let me know if you ever want to go to the footy. Nick” Wilson – “… I will head down ur way a little later and drop the battery in.” Wilson – “Sorry, I forgot to txt u after I left, … I fitted a heavy duty battery with a 2 year warranty …” Sautner – “Thanks so much mate … Are you happy to do a contra deal for tickets? How much do the batteries retail for?” Wilson – “All good m8. Those batteries retail for $239, I’m sure there will b something cool at Etihad in the future.” d.On 10 July 2012, between Mr Sautner and Ms Adriana Sautner:
Sautner – “Tickets arranged. I’d be happy with a voucher (if that’s okay) given I’ve paid fees on my credit card. Enjoy.” Ms Sautner – “I can see what we can do. Would u want the voucher to be able to be used for anyone or just yourself? If it’s for anyone (to give away) I think we can do Qantas Club passes?” e.On 24 July 2012, from Mr Sautner to Majied and Mark of the Abou Zied pizza shop:
Sautner – “Please delete my messages.” In examination-in-chief, Mr Sautner said that he “can’t explain” the message because he was “not sure who sent that”. During cross-examination, when it was indicated to Mr Sautner that he had sent the message, Mr Sautner said that Majied and Mark had been contract cleaners for Etihad Stadium but had left to run a pizza shop. He had asked them to delete the messages because they were tendering for a cleaning contract at the stadium and Mr Sautner “didn’t think it was appropriate that they were sending me messages”.
f.On 21 December 2012, between Mr Sautner and Majied and Mark:
Sautner – “I will drop tickets in before the hell of Christmas shopping!!!” Majied/Mark – “How many, how much?” Sautner – “Get me a voucher to Coles or Safeway for Christmas!!!” Majied/Mark – “Okay.” g.On 19 August 2012, between Mr Sautner and Nicole Wright, a florist, who was contracted to supply flowers to the stadium:
Sautner – “Hi Nicole, just wondering if you could deliver some roses to my girlfriend … Are you still happy to supply for contra? Thanks, Nick.” Nicole – “Of course!! That is absolutely fine. What do you want to put on the card messages?” h.On 20 November 2012, between Mr Sautner and “Hyphen”:
Sautner – “Hi Hyphen just after a potential favour – played golf yesterday for the first time in two years and borrowed a mate’s clubs. I was thinking probably time I buy a decent set – do you have any contacts that might be interested in doing a deal? Sauts” i.On 26 November 2012, between Mr Paul “Roy” Howroyd, a builder who was also the assistant coach of the Sandringham Football Club:
Howroyd –
“I just got the quote for the Alucobond out the front $4,400 inc GST. I nearly had a heart attack! Do you want to go ahead, need to know soon as possible.” Sautner – “Can you ask cash price and also mention tickets or wine as contra? Otherwise just do please …” Mr Sautner said that the full payment of $4,400 had been made.
133In addition there were email exchanges as follows:
a.in April and May 2012, between Mr Sautner and Mr John Weatherlake, a consulting structural and civil engineer:
Sautner –
“Hi John, looking forward to receiving specifications. Please let me know when you want to attend a match or five at Etihad!!!” Weatherlake – “Here is the design [for a swimming pool] … I don’t want to compromise you in any way but if you want to barter the invoice for some Etihad tickets, I would be open to that. For example I would be interested in seeing St Kilda v Carlton on the 4th of May …” Sautner – “Thanks John. No problems regarding the tickets …” Although Mr Sautner had offered Mr Weatherlake tickets, Mr Weatherlake had invoiced him for the full amount of his fees.
b.On 28 June 2012, between Mr Sautner and Mr Sean McDonnell, an assistant building surveyor:
McDonnell – “I was wrong about the Gaga tickets. Mike may be interested … Did you say it was next Tuesday? What type of seats? We’d be able to add the pool on for 4 x Lady Gaga tickets and $300 for the variation? Let me know if you’re interested.” Sautner – “Deal. I will courier tickets today. What’s the best address?” c.Between 20 and 27 June 2012, between Mr Sautner and Mr Brian Morris, the Chief Executive Officer of Melbourne and Olympic Parks Trust:
Sautner –
“Would it be possible to obtain some tickets for one of the upcoming Lady Gaga concerts at Melbourne Park?” (20 June) Morris – “Sure. We could manage the 3rd of July and if you needed we could provide you with access to our board room or similar facilities”. (20 June) Morris’ asst. – “Can you advise how many tix?” (27 June) Sautner – “Would 6 or 8 be stretching the friendship?” (27 June) Morris’ asst. – “Shouldn’t be a problem. We’ll get them out to you as soon as possible”. (27 June) Mr Sautner said he wanted Lady Gaga tickets for a contractor doing work at his property. He obtained eight tickets, some of which he gave to the contractor;
d.On 12 April 2013, between Mr Sautner and Mr Nathan Beavis, Assistant Club Manager, Good Life Health Club, Glen Iris:
Beavis –
“I’m just emailing you today hoping to take advantage of our agreement from the gym membership here at the club and see if we could get any tickets for the Saturday footy game? Geelong v Carlton”. Sautner – “How many would you like Nathan?” Beavis – “Is 4 okay?” Sautner – “Arranged and please collect from the Gate 2 customer service desk”. Mr Sautner said that Mr Beavis had offered him the “family and friends” rate for gym membership.
134As regards contra arrangements with trades people, Mr Sautner said that in February 2011 his home had sustained extensive flood damage. Insurance only covered part of the repair costs. Mr Sautner asked Mr Collins whether he could offer stadium tickets in order to obtain “mates rates”. Mr Sautner said that Mr Collins had “offered no objection”.
135Mr Sautner agreed that he had traded tickets for goods and services. He said that whilst at MSL, he had given away thousands of tickets but denied he had traded “hundreds of tickets” for goods and services. He traded tickets to a supplier of MSL (the florist) but denied that this “involved pressure”. He said that it was “not discussed” that staff would not sell tickets or gain goods and services in return for tickets. He agreed that he was “using tickets like currency” and that by receiving “mates rates” he was given a “competitive rate”. Mr Sautner said that the draining of his swimming pool and the supply of Alucobond both arose from the flood damage to his home.
162Mr Sautner’s evidence was at times unconvincing. I have referred to the example of the use of family tickets apparently for his friends’ children. At other times, there appeared to be a surprising failure to recall certain matters. I am not, however, prepared to conclude that he was an untruthful witness or that his evidence should only be accepted when corroborated.
163Mr Sergeant’s evidence at times seemed exaggerated, particularly his responses to the matters which came to light about Mr Sautner’s conduct, after his termination. The correspondence with third parties, after Mr Sautner’s termination and the additional material had come to light, appeared as much designed to bolster the case against Mr Sautner as the expression of any genuine concern or outrage. However, as with Mr Sautner, there was no basis to be generally concerned about Mr Sergeant’s credibility as a witness.
164I have, however, in relation to the evidence of both Mr Sautner and Mr Sergeant, attempted to find support from direct or inferential external evidence where it is necessary to decide between conflicting accounts. A similar difficulty arose where witnesses were not called to substantiate or refute matters given in evidence, generally by Mr Sautner. I have, in the circumstances where only four witnesses were called at the trial, carefully examined the veracity of what was usually, the unsubstantiated or uncontested statement of the witness.
165Mr Collins was not called to give evidence either by Mr Sautner or MSL. No explanation was provided by either party as to why they might not have called Mr Collins if they wished to present his evidence to the Court. On most occasions, Mr Sautner’s evidence about matters involving Mr Collins went unchallenged. It is not appropriate to speculate as to what evidence Mr Collins might have given if called as a witness by either party but instead I have tried to evaluate the evidence that was in fact produced.
166In certain cases, this included consideration as to whether I should accept the uncorroborated evidence of Mr Sautner, for example on the question of Mr Collins condoning the use of tickets to obtain better deals for flood rectification works. In other cases, such as whether the 2012 ticketing policy was exhaustive or should include other restrictions, I have also considered the available documentary and oral evidence.
Brookfield consortium tour - Conclusions
167The concerns of MSL expressed in the letter from Mr Charleson to Mr Roche dated 17 June 2013 were as to:
a.whether Mr Sautner was being paid by the Brookfield consortium;
b.whether confidential information had been disclosed.
168MSL also suggested at the trial that confidential information must have been given to Brookfield because:
a.of the places that its representatives were taken to on the tours;
b.of what must have been said to them by Sautner and Brown in response to the requests for information;
c.photographs were taken by the Brookfield personnel.
169MSL also suggested that taking the Brookfield representatives on the tours was wilfully disobedient of an express instruction by Mr Sergeant in his email dated 25 February 2013 that Mr Sautner, “have no involvement with the Perth Stadium knowledge team or any other entity involved with this project or any similar project”.
170There is no suggestion that Mr Sautner obtained any financial benefit, or expected to obtain any such benefit, from arranging or conducting the tours of the stadium. In relation to the issue of disclosure of confidential information:
a.Mr Roche specifically denied that any information had been obtained. He made this statement after taking time to check with Mr Coles;
b.Mr Sautner and Mr Brown both denied that there had been any disclosure of confidential information;
c.the evidence of the parts of the stadium to which the attendees were taken does not suggest that restricted or sensitive areas were included.
171I do not accept that Mr Sautner’s statements, that he read out tour details from his diary at the executive team meeting and told Mr Sergeant on 23 May that he was taking a tour, provided any real information to Mr Sergeant that would have enabled him to connect the tour to the Brookfield consortium.
172I do not necessarily accept Mr Sautner’s evidence that he directly or specifically told Mr Coles, either before, at or after the tours, that he was not able to give Brookfield the detailed information they sought. Nevertheless, there is no evidence to support a finding that confidential information was disclosed.
173I consider that the following conclusions are appropriate:
a.with regard to the places visited, the records from the ticket scans and the security card scans provide no suggestion that places were visited on the Brookfield tours that did not form part of public tours. In relation to the visit to the communication centre, the unchallenged evidence of Mr Brown was that no confidential information could be obtained, unless the system itself was interrogated, which did not occur;
b.so far as the provision of information in response to the requests by Brookfield, no specific suggestion has been made of information that was provided. The emails between Coles and Sautner appear to be frank and open communications with nothing concealed for private discussion;
c.it is likely also, that Mr Ian Collins, as a consultant to the Brookfield consortium, would have had knowledge of most, if not all, matters that could be provided by Sautner or Brown to the consortium;
d.the taking of photographs was apparently a regular occurrence on all tours of the stadium. The offer by Mr Roche to request photographs to be deleted by the attendees on the tour was apparently not taken up by MSL;
e.as to whether Mr Sautner deliberately disobeyed a written direction of Mr Sergeant’s, what was discussed between Mr Sergeant and Mr Sautner, and which was the main thrust of the email from Mr Sergeant to Mr Sautner on 25 January 2013, was the personal involvement by Mr Sautner in a group involved in the Perth Stadium, or similar project, and the potential conflict that might thereby arise;
f.Mr Sautner could have clarified the appropriateness of the Brookfield tours by a direct enquiry to Mr Sergeant as to whether he had any objection. Whilst it is possible that Mr Sautner’s evidence about disclosing the fact of the tour to the executive team meeting and to Mr Sergeant in the corridor on 23 May might constitute attempts to cover his actions after the event, I do not consider that there is sufficient basis to conclude that at the time the tours were arranged and conducted, Mr Sautner was deliberately and wilfully disobeying a direction by Mr Sergeant.
174I note also that:
a.Mr Sautner had responsibility within MSL for tours and had conducted many, including for competitors from other venues in Melbourne;
b.although Mr Collins had asked Mr Sautner to arrange the tour there is no evidence to support the suggestion that therefore Mr Sautner had a sense of obligation to Mr Collins, which conflicted with his duty to MSL;
c.the correspondence between Mr Sautner and Mr Sergeant had taken place some months earlier. That correspondence, as I have mentioned, appeared to focus upon Mr Sautner’s personal involvement in a consortium or group other than MSL involved in the Perth Stadium or a similar project, similar to the paid role he would have had as a member of the “knowledge team”, and was not a broader prohibition;
d.Mr Sergeant, to an extent in his evidence, appeared to exaggerate the interest of MSL in another consortium. The email exchange between himself and Mr McDonough appears to refer to a request by Mr McDonough for Mr Sergeant personally to have a limited role in a consortium as an adviser, although Mr Sergeant in his response tried to broaden the attractiveness of both himself and MSL as participants in any consortium. Also, it appears that in December 2012 Mr Sergeant effectively closed off further participation, although he may have hoped for a renewal of interest for participation by either himself of MSL. There was apparently no further contact between Mr McDonough and Mr Sergeant after the brief exchange of emails in late December 2012;
e.Mr Sergeant authorised a tour by Honeywell and Mr Brown apparently conducted a tour with at least one other party interested in the Perth Stadium project, without any problems arising.
175Accordingly, I consider that there is no basis to conclude that any ground of serious misconduct or breach of the employment contract or other obligations of Mr Sautner to MSL has been made out.
Australian Rugby Union tickets – Conclusions
176The complaints made by MSL in relation to this matter are that:
a.Mr Sautner abused his position by obtaining more tickets than the maximum allowed of four and he did so by imposing upon a subordinate, Ms Wight;
b.Mr Sautner intended to misuse family tickets to obtain cheaper admission for adults attending the event;
c.there was the potential for upsetting a major sponsor who had a particular sensitivity to ticketing misuse.
177On the first release of tickets, Mr Sautner obtained 12 tickets using three separate credit cards. There would have been no problem if the transactions had been processed by three separate dealings via the internet. The problem was for one person to do it, face to face, and through a subordinate who may have been made to do something that both she, and probably Mr Sautner, knew was wrong.
178On the second release of tickets, Mr Sautner obtained 24 tickets, although he had already purchased his allocation of four tickets. Mr Dixon had not previously purchased tickets and Mr Sautner used Dixon’s credit card without him being present. Mr Sautner obtained 20 additional tickets in excess of his entitlement, quite apart from the fact that Mr Dixon did not personally purchase the tickets.
179The second purchase of tickets also involved an imposition on Ms Wight. Mr Sautner said that Ms Wight could have said “no”. Ms Wight said in evidence that this was a situation which had never happened to her before, presumably including with the involvement of Mr Sautner. Mr Sautner conceded that his actions were a “flagrant” breach of the ARU ticketing policy. Subsequently, all tickets were cancelled and the money refunded. This is likely to have caused some embarrassment to Mr Sautner, although perhaps militated by the fact that by that stage his employment with MSL had been terminated.
180Mr Horsley is not an Australian resident, although apparently his brother was. The tickets were bought in the name “Daniel Horsley”, which may be the name of the brother. Further, it was not clear from the evidence the significance of the ARU restriction that the available tickets were only for purchase by Australian residents. It may have been, for example, that there were special ticketing arrangements for overseas residents with allocations that the ARU had specifically made. However, the reason for the restriction was not explained.
181Mr Sautner obtained a family pass for Mr Horsley. He said that he was going to use two “adult” passes from the family tickets he had separately purchased and that this was the reason for crossing out the names on two tickets. It is not clear why Mr Sautner could not have explained this fact to Mr Horsley. I do not accept, however, that Mr Sautner was going to risk the non-admission of Mr Horsley and his party, if four adults turned up with one set of family tickets. It would be very embarrassing for Mr Horsley and his party to be turned away or a fuss created over their admission. It is not clear from the evidence about the checking of family tickets whether the risk of disclosure would be slight. I consider it unlikely that Mr Sautner would have risked that possibility.
182Generally, the evidence of Mr Sautner that there were a number of children who would attend as part of the family groups to whom he would distribute the tickets, seems improbable. I do not consider, however, that the evidence justifies a conclusion that Mr Sautner purchased family tickets in order to rort the system.
183Mr Sautner had the responsibility at the stadium for ticketing matters. It is difficult to imagine that, if the system for family ticket admission could be as easily abused as was suggested, it would have not been fixed long before; for example, by marking two of the tickets as adult tickets and two of the tickets as children’s tickets. The tickets for the rugby test were special tickets. Mr Sautner had access to unlimited tickets to other events to which he and his guests would have had free entry. It appears unlikely, therefore, that he would have developed a family ticket “scam” for the advantage of himself and his friends on other occasions.
184The ARU had detailed ticketing requirements. Apparently, it took steps to ensure that tickets were distributed in accordance with the policy, particularly the limitation on multi ticket purchase. The response of the ARU representative to Mr Sergeant’s letter of explanation as to what had happened was to describe it as an “unfortunate” issue and to thank MSL for the manner in which it was handled.
185However, Mr Alker was the superior of the author of the letter and had apparently been prepared to condone Mr Sautner’s actions by considering the reinstatement of all the tickets and by inviting Mr Sautner to a pre-match function. it is likely, therefore, because of Mr Sautner’s position with MSL and his prior dealings with ARU and its senior executives, that the risk of the “severe reputational damage” that Mr Sergeant was concerned might result, was unlikely.
186In the circumstances, although ARU’s ticketing policies were breached, I do not consider that this issue alone would justify the summary dismissal of Mr Sautner’s employment.
Bartering tickets – Conclusions
187The essential complaints made by MSL are that:
a.it was a misuse of the free tickets distribution to use them for barter or to obtain financial benefit (in the form of discounts for services provided);
b.goods obtained in return for tickets given to suppliers with a contract with the Stadium would create problems of transparency concerning those arrangements.
188It was suggested that suppliers may feel imposed upon or that they would need to provide favours in order for their contractual arrangements to be favourably viewed. This would be particularly so as Mr Sautner probably had some authority to influence decision making in relation to suppliers. Mr Sautner may have recognised this problem by requesting the deletion of text messages from a potential supplier of services to MSL.
189MSL submitted that the examples exposed were simply the “tip of the iceberg”. There is some strength in this submission as some text messages revealed other instances that were referred to in the exchanges; for example, the supply of vouchers on earlier occasions. The text messages are limited to a discrete nine month period and it is therefore possible, or indeed likely, that similar conduct would be revealed at other times.
190There were, however, no clear guidelines in relation to the use that might be made of free tickets, including the bartering of tickets in exchange for goods and services or for some other financial advantage:
a.the 2012 ticketing policy does not refer to any restrictions on the use of tickets;
b.Ms Wight said that the restrictions were “well known”;
c.the ARU ticketing policy specifically referred to no sales or contras;
d.Mr Sergeant said that it was company and industry policy that tickets could not be used in the way Mr Sautner had.
191It is clear that Etihad stadium, as a sporting and entertainment venue, has particular features which are not common to other workplaces. Members of the public usually pay to gain admission to the venue. The stadium can cater for crowds in excess of 50,000 for some events. The experience offered at an event can vary according to the level of entertainment and refreshments required.
192It appears also that the operation of the stadium involved issues of hospitality, reciprocity and what might be seen as “the return of favours”. The evidence referred to many examples of this at various levels:
a.the process adopted by MSL to deal with demands for tickets for popular events such as the Australian Wallabies and the British & Irish Lion Rugby Test, for which MSL had to prioritise in order to fulfil its “business requirements”;
b.the processing of the application by Mr Sautner to Mr Morris at Melbourne and Olympic Parks Trust for Lady Gaga tickets;
c.the reciprocal courtesies offered to Mr Horsley;
d.the provision of “meat trays” by a supporter or sponsor for fundraising by the Sandringham Football Club;
e.Mr Sautner choosing to, for example seek building services, from a person with whom he was socially connected.
193The supply of tickets might be regarded as one of the perquisites or “perks” of employment at MSL. Senior executives are entitled to 100 tickets each year, other full-time staff to 50, part time and casual staff to lesser numbers. It is clear that every disposition of a free ticket would involve the conveying of a “favour”. In the circumstances, the receipt of tickets from MSL involved the bestowal of some commercial value on the staff member. That value is recognised by the assumption by MSL of a fringe benefits tax liability in respect of the benefit received by the employee. There is a transparent procedure for applications for tickets so that appropriate fringe benefit tax returns can be prepared. Compliance with that procedure was regarded as fundamental to an employee’s continued employment.
194It is likely that Mr Sautner was aware that his bartering of tickets was not “acceptable” practice:
a.he asked Mr Collins when he was CEO if Sautner could get “mate’s rates” for flood damage repairs in exchange for tickets, and that Mr Collins had “no objection”;
b.the fact that Mr Sautner asked this of Mr Collins indicated a knowledge that otherwise to use tickets in this way might be regarded as inappropriate;
c.in the circumstances, Mr Sautner could and perhaps should have reaffirmed the position taken by Mr Collins with Mr Sergeant.
195It is appropriate to look at what “harm” has been done to MSL by Mr Sautner’s conduct. If a financial return is sought for free tickets, it may set up an informal ticketing system. However, the number of tickets to which this misuse may apply was limited by the number of tickets made available to staff members, although Mr Sautner said in respect of himself that he had access to an “unlimited” number of tickets. This “system” was in place for the benefit of MSL, as well as its employees, in order to maximise attendances at events, which had financial and other benefits for MSL.
196Mr Sautner appeared to accept that the sale of free tickets would be inappropriate. To obtain an equivalent financial benefit, for example, in the form of a voucher or a reduced price for goods and services may not be significantly different in principle to a sale of free tickets for cash. Further, if the distribution of free tickets to suppliers or potential tenderers for services was made in expectation of a financial or other benefit, then the “fairness” and transparency of the dealings between MSL’s suppliers, or others with contractual arrangements, may be affected.
197As to whether this was, or was likely to be, the position as a result of Mr Sautner’s actions is unclear. I would not be prepared to draw the inference that more serious misconduct was involved simply because of Mr Sautner’s dealings with the florist or the request by Mr Sautner that text messages be deleted. No evidence was called from either the florist or the pizza shop proprietors and there was no evidence of these persons’ contractual arrangements or other dealings with MSL.
198In the absence of clear guidelines and no other areas of complaint against Mr Sautner, the following action would, in my view, have been the appropriate response to Mr Sautner’s actions: to clarify the ticketing policy to put beyond doubt that the sale or bartering of tickets, including with those who had a contractual or a potential contractual arrangement with MSL, would be inappropriate and also regarded as “a serious breach of terms of employment”.
199Further, if Mr Sautner were simply pursuing or enlarging on a practice condoned by the previous CEO, Mr Collins, then a clear policy was required if further restrictions were to be imposed on a “process” recognised as involving a “benefit” to the employee. In the circumstances, the summary determination of employment would not be appropriate without this action first having been taken.
Disparagement of Mr Sergeant by Mr Sautner – Conclusions
200There appear to be two areas of complaint:
a.Mr Sautner’s communications with Mr Thomas and Mr Dixon contained derogatory references to Mr Sergeant;
b.Mr Sautner made derogatory comments and showed unflattering photos of Mr Sergeant to Ms Wight.
201It is appropriate to examine the context of the communications. Mr Thomas and Mr Dixon, were close friends of Mr Sautner. Their emails and text messages were intended as private communications and were not to be more widely distributed. Ms Wight was a friendly work colleague and Mr Sautner was, at the time of the communications, her immediate superior. They had both worked at MSL for over 12 years and directly with each other for extended periods.
202The communications and discussions would have remained private if:
a.MSL had not had Mr Sautner’s phone and emails forensically examined after his employment was terminated, although this was justified on the basis that it was a work phone and computer;
b.MSL had not questioned Ms Wight about ticketing matters and presumably broadened their inquiries.
203In relation to Ms Wight’s evidence, Mr Sautner said that he could not recall comments made to Ms Wight. He was not cross-examined about the detail of the evidence Ms Wight subsequently gave. The essential features of that evidence were that:
a.there were a couple of dozen conversations;
b.the conversations extended over a number of months;
c.the areas of discussion included Mr Sergeant’s dress sense, his drinking, falling asleep in meetings and his general fitness for his position.
204Ms Wight was unable to give specific evidence about any particular conversation, for example when, where or what was said. In regards to the timing of the examples of disparagement in the text messages relied on, they included messages both before and after Mr Sergeant taking up the appointment as CEO. This was a position for which Mr Sautner was an unsuccessful candidate. Perhaps, for a time, this made Mr Sautner a disgruntled competitor and not a loyal supporter. However, they worked for about eight months together for MSL, including travelling overseas, before Mr Sautner lost his job.
205Factors in relation to this complaint which do not support a finding of serious misconduct, are:
a.the comments were made in private conversations and would have remained private but for the investigations by MSL which were triggered by the termination of employment;
b.the reaction by Mr Sergeant in his evidence to the disparaging remarks, including his references to the “continual trails of comments”, that Mr Sautner’s comments were “shocking” and the fact that his reputation had been “tarnished”, does not seem commensurate;
c.Mr Sergeant conceded that employees “were entitled to their own opinions”, presumably about their superiors, but it depended on “how they express it”;
d.Ms Wight referred to “tea room discussions” which occur in any organisation;
e.no suggestion was made that Mr Sergeant’s reputation had been in any way affected by the disparaging remarks.
General conclusions
206It is important to consider these issues in light of the seniority within MSL of Mr Sautner’s position, the obligations he assumed as an employee and executive and the responsibilities he had to MSL and to the CEO, Mr Sergeant. It is noted that, in Mr Sautner’s case, MSL terminated the services of a senior employee upon the basis that it would pay out the period of notice in the employment contract and make an appropriate redundancy payment. Mr Sautner had been with MSL for 13 years and had apparently served the company well. However, upon a review of the company’s operations undertaken by the CEO, it was determined that Mr Sautner’s position was not required and there was no available position in the company that he could fill. Mr Sergeant said that these conclusions were reached without the creation of a single document. The company’s board agreed to Mr Sautner’s termination and the payment of benefits of approximately $155,000.
207It is not an issue in this proceeding as to whether the position of Director, Commercial Operations had become redundant or whether Mr Sautner’s skills and experience could not be otherwise used by MSL. As Mr Friend SC conceded, MSL was entitled to adopt that position as Mr Sautner’s employment contract entitled MSL to give six months’ notice of termination or to pay out the period of notice. It is certainly not appropriate for me to speculate about the issue but simply to note that the application of abstract concepts of “morality” in relation to employment or other contracts is not appropriate.
208Companies like MSL must make difficult decisions because of what are essentially commercial considerations. Maintaining the integrity of a ticketing system may be important for the reason that clients who are deciding on a venue for their events or suppliers tendering for the supply of a service to the venue, need to have confidence that their dealings with MSL are transacted appropriately and in accordance with sound commercial principles.
209In the present case, I consider that Mr Sautner:
a.may have been wise, in view of the communications with Mr Sergeant in December 2012 and January 2013 to have specifically “cleared” the Brookfield tour with Mr Sergeant;
b.should have adhered to the strict terms of the ARU’s ticketing policy by transacting his private ticketing purchases as separate dealings and by limiting each person’s purchase to four tickets;
c.clarifying whether Mr Sergeant had any “objection” to Mr Sautner using free tickets to obtain ”mate’s rates” for the flood damage repairs and by not, where there was any doubt that his dealings might be regarded as unacceptable or undesirable, of otherwise receiving benefits from the distribution of tickets which had a monetary value or which might possibly compromise commercial arrangements with MSL’s suppliers;
d.should not have engaged in purile exchanges with Mr Thomas and Mr Dixon or made inappropriate comments, apparently on a regular basis, to Ms Wright.
210In all the circumstances, however, I am not satisfied that a basis has been made out, either upon separate consideration of these matters or together, that justifies summary determination of Mr Sautner’s employment. The conduct does not demonstrate a repudiation by Mr Sautner of his obligation to honour the essential terms and conditions of his employment contract.
Redundancy payment
211If there is no basis for summary dismissal, Mr Sautner is entitled to a redundancy payment pursuant to s.119(2) of the Fair Work Act. Because of the operation of transitional provisions, Mr Sautner’s entitlement in respect of his period of service, was the equivalent of seven weeks’ notice.
212MSL submitted that the redundancy pay entitlements under s.119 prescribe a statutory minimum and it was open to an employer to provide a contractual entitlement which was “equal to or better than the minimum”. MSL submitted that the entitlement to six months’ notice of termination or payment in lieu in Mr Sautner’s contract of employment where his termination is “for any reason”, necessarily included the circumstances of redundancy and therefore Mr Sautner is not entitled to any further payment.
213In my view, the submission that the payment in lieu of notice in the employment contract was intended to encompass compensation for redundancy should not be accepted. Under s.119 a redundancy occurs when:
a.“The employer no longer requires the job done by the employee to be done by anyone”; and
b.regard is had to the period of service of the employee in determining the appropriate remuneration.
214The payment of six months in lieu of notice was appropriate for the termination of the continuing employment of a person in Mr Sautner’s position. His redundancy, or the declaration that his job was no longer necessary and that no other position was available to him, was an entirely separate incidence of employment. It could not therefore be said that the payment of six months notice in lieu was in excess of the employee’s entitlement to redundancy under the Fair Work Act.
215I consider that the fact that the Fair Work Act makes provision for four weeks pay in lieu of notice upon termination, rather than the more generous period of six months in Mr Sautner’s contract of employment does not affect the applicability of the statutory entitlement to a redundancy payment because of the nature of Mr Sautner’s position and the fact that redundancy was a matter entirely separate to the period of notice required to terminate employment.
Orders
216It is therefore appropriate that I order that there be judgment for the plaintiff against the defendant that the defendant pay to the plaintiff the sum of $154,978.84.
217I will hear the parties further on the following matters:
a.interest;
b.pecuniary penalty;
c.the defendant’s counterclaim; and
d.costs.
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Certificate
I certify that the preceding 59 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 2 May 2014.
Dated: 2 May 2014
Catherine Kusiak
Associate to His Honour Judge Anderson
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