FEDERAL COURT OF AUSTRALIA
Shea v TRUenergy Services Pty Ltd (No 6) [2014] FCA 271
Citation: Shea v TRUenergy Services Pty Ltd (No 6) [2014] FCA 271 Parties: KATE SHEA v ENERGYAUSTRALIA SERVICES PTY LTD File number: VID 289 of 2012 Judge: DODDS-STREETON J Date of judgment: 25 March 2014 Catchwords: INDUSTRIAL LAW – employment – adverse action – respondent employer dismissed applicant employee for redundancy – adverse action taken by respondent against applicant under s 342(1) of the Fair Work Act 2009 (Cth)
INDUSTRIAL LAW – employment – complaints – whether adverse action taken against applicant because applicant exercised workplace rights under s 340 of the Fair Work Act 2009 (Cth) – whether applicant exercised workplace rights by making any of five successive complaints in relation to her employment under s 341(1)(c)(ii) of the Fair Work Act 2009 (Cth) – first and second complaint related to allegation of sexual harassment by senior colleague in Hong Kong – third complaint related to allegations of further misconduct by the senior colleague and other employees in the course of the investigation into the Hong Kong incident – fourth complaint related to the alleged deficiencies in the investigation and investigator’s report and included further allegations of misconduct by colleagues, including the respondent’s managing director – fifth complaint related to the managing director’s alleged attempt unlawfully to terminate the applicant’s employment – meaning of complaints that employee is able to make in relation to employment – whether an instrumental basis required for a complaint under s 341(1)(c)(ii) – whether complaint must be made in good faith – whether complaints made by applicant were genuine grievances made in good faith for a proper purpose – relevance of and evidence for the applicant’s allegations of misconduct by colleagues (including the respondent’s managing director) and of corporate culture tolerant of sexual harassment made in the fourth complaint and at trial
INDUSTRIAL LAW – employment – redundancy – whether restructure of the respondent’s business units and the applicant’s dismissal for redundancy were genuine – whether complaints made by the applicant a substantial and operative reason for the decision to terminate her employment for redundancy
Legislation: Evidence Act 1995 (Cth) s 140(1)
Equal Opportunity Act 1995 (Vic)
Equal Opportunity Act 2010 (Vic)
Fair Work Act 2009 (Cth) ss 340, 341, 342, 360, 361, 539(2), 545, 551
Interpretation of Legislation Act 1984 (Vic) s 48(b)
Occupational Health and Safety Act 2004 (Vic)
Sex Discrimination Act 1984 (Cth) s 9(2)Cases cited: Australian Postal Corporation v Stephens [2011] FCA 947
Ananda Marga Pracaraka Samgha Ltd v Tomar (No 4) [2012] FCA 385
BHP Coal Pty Ltd v Construction, Forestry, Mining andEnergy Union [2013] FCAFC 132
Blackadderv Ramsey Butchering Services Pty Ltd (2005) 221 CLR 539
Board of Bendigo Regional Institute of Technical and Further Education v Barclay (2012) 290 ALR 647; [2012] HCA 32
Brannigan v Commonwealth of Australia (2000) 110 FCR 566; [2000] FCA 1591
Construction, Forestry, Mining and Energy Union (CFMEU) v BHP Coal Pty Ltd (No 3) [2012] FCA 1218
Construction, Forestry, Mining and Energy Union (CFMEU) v Pilbara Iron Co (Services) Pty Ltd (No 3) [2012] FCA 697
Comcare v PVYW (2013) 136 ALD 1; [2013] HCA 41
General Motors Holden Pty Ltd v Bowling (1976) 51 ALJR 235; (1976) 12 ALR 605
Greater Dandenong City Council v Australian Municipal, Administrative, Clerical and Services Union (2001) 112 FCR 232; [2001] FCA 349
Harrison v In Control Pty Ltd [2013] FMCA 149
Hill v Compass Ten Pty Ltd (2012) 205 FCR 94; [2012] FCA 761
Jones v Queensland Tertiary Admissions Centre Ltd (No 2) (2010) 186 FCR 22; [2010] FCA 399
Maritime Union of Australia v CSL Australia Pty Ltd [2002] FCA 513
Macauslane v Fisher and Paykel Finance Pty Ltd [2003] 1 Qd R 503
Miller v Cameron (1936) 54 CLR 572
Murrihy v Betezy.com.au Pty Ltd [2013] FCA 908
National Tertiary Education Union v Royal Melbourne Institute of Technology [2013] FCA 451
Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449
Perkins v Grace Worldwide (Aust) Pty Ltd (1997) IR 186
Pearce v WD Peacock & Company Limited (1917) 23 CLR 199
Quinn v Overland (2010) 199 IR 40; [2010] FCA 799
Ratnayake v Greenwood Manor Pty Ltd [2012] FMCA 350
Zhang v Royal Australian Chemical Institute Inc (2005) 144 FCR 347; [2005] FCAFC 99Date of hearing: 26 August to 6 September 2013 and 7 and 8 October 2013 Date of last submissions: 11 November 2013 Place: Melbourne Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 908 Counsel for the Applicant: Mr C Gunst QC with Mr R Millar Solicitor for the Applicant: KR Legal Counsel for the Respondent: Mr J Bourke SC with Mr P O’Grady Solicitor for the Respondent: Minter Ellison
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 289 of 2012
BETWEEN: KATE SHEA
ApplicantAND: ENERGYAUSTRALIA SERVICES PTY LTD
Respondent
JUDGE:
DODDS-STREETON J
DATE OF ORDER:
25 MARCH 2014
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
1.The application be dismissed.
2.The respondent is to notify the applicant and the Court, by 4.00 pm on 31 March 2014, whether it intends to seek any order as to costs of the proceeding.
If the respondent does so:
3.The respondent will file and serve an outline of submissions and any supporting affidavits by 4:00 pm on 15 April 2014.
4.The applicant will file and serve an outline of submissions and any supporting affidavits by 4.00 pm on 1 May 2014.
5.The matter be listed for hearing, at a time convenient to the Court and the parties on or after 2 May 2014.
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 289 of 2012
BETWEEN: KATE SHEA
ApplicantAND: ENERGYAUSTRALIA SERVICES PTY LTD
Respondent
JUDGE:
DODDS-STREETON J
DATE:
25 MARCH 2014
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
Introduction
By an originating application under the Fair Work Act 2009 (Cth) (“the Act”) and a statement of claim dated 4 April 2012, the applicant, Kate Shea, alleged that her employer, the respondent, EnergyAustralia Services Pty Ltd (formerly TRUenergy Services Pty Ltd), contravened s 340(1) of the Act when, on 6 February 2012, it dismissed her from her employment as its Director of Corporate & Government Affairs on the stated ground that her position had become redundant.
The applicant alleged that the redundancy was not genuine but a mere pretext for her dismissal, which constituted adverse action within the terms of s 342 of the Act and, in fact, she was dismissed for the reason, or reasons including the reason, that she had exercised a workplace right by making each of five successive complaints (on 24 February 2010, 5 April 2011, May or June 2011, 21 June 2011, and 4 October 2011 respectively) that she was, within the meaning of s 341(1)(c)(ii) of the Act, able to make in relation to her employment.
The applicant sought relief including reinstatement, compensation for loss and damage and, alternatively to reinstatement, compensation for future loss and damage.
The legislation
The Act relevantly provides:
Division 3—Workplace rights
340 Protection
(1) A person must not take adverse action against another person:
(a) because the other person:
(i) has a workplace right; or
(ii) has, or has not, exercised a workplace right; or
(iii)proposes or proposes not to, or has at any time proposed or proposed not to, exercise a workplace right; or
(b)to prevent the exercise of a workplace right by the other person.
Note: This subsection is a civil remedy provision (see Part 4-1).
(2)A person must not take adverse action against another person (the second person) because a third person has exercised, or proposes or has at any time proposed to exercise, a workplace right for the second person’s benefit, or for the benefit of a class of persons to which the second person belongs.
Note: This subsection is a civil remedy provision (see Part 4-1).
341 Meaning of workplace right
Meaning of workplace right
(1) A person has a workplace right if the person:
(a)is entitled to the benefit of, or has a role or responsibility under, a workplace law, workplace instrument or order made by an industrial body; or
(b)is able to initiate, or participate in, a process or proceedings under a workplace law or workplace instrument; or
(c)is able to make a complaint or inquiry:
(i)to a person or body having the capacity under a workplace law to seek compliance with that law or a workplace instrument; or
(ii)if the person is an employee—in relation to his or her employment.
Meaning of process or proceedings under a workplace law or workplace instrument
(2)Each of the following is a process or proceedings under a workplace law or workplace instrument:
(a) a conference conducted or hearing held by the FWC;
(b)court proceedings under a workplace law or workplace instrument;
(c) protected industrial action;
(d) a protected action ballot;
(e) making, varying or terminating an enterprise agreement;(f)appointing, or terminating the appointment of, a bargaining representative;
(g)making or terminating an individual flexibility arrangement under a modern award or enterprise agreement;
(h)agreeing to cash out paid annual leave or paid personal/carer’s leave;
(i)making a request under Division 4 of Part 2-2 (which deals with requests for flexible working arrangements);
(j)dispute settlement for which provision is made by, or under, a workplace law or workplace instrument;
(k)any other process or proceedings under a workplace law or workplace instrument.
…
342 Meaning of adverse action
(1)The following table sets out circumstances in which a person takes adverse action against another person.
…
Division 7—Ancillary rules
360 Multiple reasons for action
For the purposes of this Part, a person takes action for a particular reason if the reasons for the action include that reason.
361 Reason for action to be presumed unless proved otherwise
(1) If:
(a)in an application in relation to a contravention of this Part, it is alleged that a person took, or is taking, action for a particular reason or with a particular intent; and
(b)taking that action for that reason or with that intent would constitute a contravention of this Part;
it is presumed, in proceedings arising from the application, that the action was, or is being, taken for that reason or with that intent, unless the person proves otherwise.
(2)Subsection (1) does not apply in relation to orders for an interim injunction.
The Explanatory Memorandum to the Fair Work Bill 2008 (Cth) states at [1370]:
Subparagraph 341(1)(c)(ii) specifically protects an employee who makes any inquiry or complaint in relation to his or her employment. Unlike existing paragraph 659(2)(e) of the [Workplace Relations Act 1996 (Cth)], it is not a pre-requisite for the protection to apply that the employee has “recourse to a competent administrative authority”. It would include situations where an employee makes an inquiry or complaint to his or her employer.
The Explanatory Memorandum sets out the following example at [1370]:
Rachel is employed in a night fill position. The ladder that she uses at work to stock the shelves is missing a rung which makes it dangerous for her to climb. Rachel raises this issue with her employer. Under subparagraph 341(1)(c)(ii) Rachel has a workplace right because she has made a complaint/inquiry to her employer in relation to her safety concerns regarding the ladder.
The complaints
The statement of claim alleged five separate complaints made by the applicant in relation to her employment between February 2010 and October 2011.
The first complaint was pleaded as follows:
The Applicant made a complaint that on 24 February 2010 she had been sexually harassed by, Kevin Holmes, the Chief Financial Officer of the Respondent after a work function in Hong Kong … on or about 24 February 2010 to David Purvis, the Human Resources Director of the respondent (the First Complaint) …
PARTICULARS
The complaint was oral and was to the effect alleged.
The second complaint was pleaded as follows:
The Applicant made a complaint that on 24 February 2010 she had been sexually harassed by, Kevin Holmes, the Chief Financial Officer of the Respondent after a work function in Hong Kong … on or about 5 April 2011 to Richard McIndoe, the Chief Executive Officer of the Respondent (the Second Complaint).
PARTICULARS
The complaint was oral and was to the effect alleged.
The third complaint was pleaded as follows:
In the course of the investigation into the Second Complaint, the Applicant made further complaints about the conduct of employees of the Respondent, being Kevin Holmes, Richard McIndoe, David Purvis and Linda Robertson (the Third Complaint).
PARTICULARS
The complaints were made orally to Ms Mercuri in the course of her investigations.
The fourth complaint was pleaded as follows:
On or about 21 June 2011, the Applicant made a complaint to the Respondent about the manner in which her concerns of sexual harassment were dealt with by the Company and deficiencies in the investigation report (the Fourth Complaint).
PARTICULARS
The Fourth Complaint was in writing and forwarded by the Applicant to Mr McIndoe, on behalf of the Respondent, by e-mail on 21 June 2011, a copy of which is available for inspection at the offices of the solicitors for the Applicant by appointment.
The fifth complaint was pleaded as follows:
On 4 October 2011, the Respondent purported to terminate the Applicant’s employment, with such termination being withdrawn by the Respondent after the Applicant made a complaint about the Respondent’s actions (the Fifth Complaint).
PARTICULARS
The Fifth Complaint was made orally, after Mr McIndoe, on behalf of the Respondent, handed a letter to the Applicant entitled “termination of employment” or words to similar effect. The letter is in the possession of the Respondent. The Applicant refused to accept the letter, and said to Mr McIndoe “You can't do this – it is unlawful” or words to similar effect. Mr McIndoe withdrew the purported termination.
Broadly speaking, the first and second alleged complaints are the applicant’s assertion to the respondent’s Human Resources Director, David Purvis, in February 2010, and subsequently to the respondent’s managing director, Richard McIndoe, in April 2011, that she had been sexually harassed in February 2010 by the respondent’s Chief Financial Officer, Kevin Holmes, in a Hong Kong bar after they had attended a work-related dinner.
The third alleged complaint is the applicant’s assertions of further misconduct by Mr Holmes and by several other colleagues (including Mr McIndoe) made to Patrizia Mercuri, a partner at the law firm Lander & Rogers, who was retained by the respondent to conduct an independent investigation of the applicant’s claim that Mr Holmes had sexually harassed her in Hong Kong (“the Mercuri investigation”) and who produced a report dated 14 June 2011 setting out her findings (“the Mercuri report”).
The fourth, most significant, alleged complaint is more difficult precisely to describe, as it is pleaded as a complaint about the way in which the respondent dealt with the applicant’s concerns of sexual harassment and deficiencies in the Mercuri report, and is identified in the particulars by reference to an email and an attachment forwarded to Mr McIndoe by the applicant on 21 June 2011.
The email attached a letter of the applicant’s lawyer dated 21 June 2011 marked “without prejudice save as to costs” and “strictly confidential” (“the 21 June letter”) addressed to the chief executive officer of the respondent’s parent company in Hong Kong, who had, effectively, power to dismiss Mr McIndoe. The applicant’s covering email to Mr McIndoe indicated that the 21 June letter (which contained, inter alia, allegations of serious misconduct by Mr McIndoe himself) would not be sent to its addressee if Mr McIndoe made a firm commitment to meet a number of the applicant’s demands or conditions set out in the letter.
The applicant sent the email and the 21 June letter to Mr McIndoe about a week after the release of the Mercuri report on the investigation into the applicant’s allegation that Mr Holmes sexually harassed her in Hong Kong. The report found that the allegation was not substantiated. The 21 June letter was a lengthy and complicated document set out in full as Annexure A to these reasons. Broadly speaking, the 21 June letter alleged that the Mercuri investigation and the associated Mercuri report were flawed, due, inter alia, to false evidence and collusion by Messrs Holmes, McIndoe and Purvis and a failure to include in the investigation additional allegations of further misconduct by Mr Holmes towards employees other than the applicant. The 21 June letter asserted that the investigation was a cover up in which Mr McIndoe was motivated to collude because he also participated in sexual misconduct (of which two specific instances were alleged) and fostered a workplace culture in which sexual harassment was prevalent and condoned.
The fifth alleged complaint was the applicant’s assertion at a meeting on 4 October 2011 (in response to Mr McIndoe’s alleged attempt to terminate her employment) that Mr McIndoe could not do so because it would be unlawful.
The parties’ principal submissions
The applicant primarily submitted that a complaint which an employee is able to make within the meaning of s 341(1)(c)(ii) of the Act should be broadly construed and requires no instrumental, statutory or contractual source. Alternatively, she submitted that there were, in any event, statutory and/or contractual bases for her ability to make the relevant complaints. Further, the applicant submitted that the requirement that the complaint be in relation to the person’s employment was equally broad and was satisfied in this case.
The applicant further submitted that she made each of the pleaded complaints in the terms alleged and that each was a complaint that she was able to make in relation to her employment. The applicant submitted that the respondent, by its managing director, Mr McIndoe, who was the sole decision‑maker, dismissed her because of, or for reasons including, the making of some or all of the complaints. At trial, the applicant acknowledged that the fourth complaint (in which she accused Mr McIndoe himself of sexual misconduct (albeit towards other persons), collusion and giving false evidence) was the crucial complaint, to which the other alleged complaints were merely subsidiary. The applicant submitted that there was no express or implicit statutory requirement that a complaint (including her accusations in relation to Mr McIndoe in the 21 June letter) express a bona fide grievance, be capable of proof or substantiation or be made in good faith.
The applicant alternatively submitted that if a complaint must be a genuinely held grievance made in good faith, each of the complaints she made in this case satisfied such requirements. To that end, the applicant at trial reiterated the allegations of sexual misconduct by Mr McIndoe made in the 21 June letter. She also alleged a considerable number of additional instances of Mr McIndoe’s sexual misconduct or improprieties towards other employees, as evidence that she held a genuine belief in the validity of the allegations in the 21 June letter. The applicant testified that she made each of the pleaded complaints in good faith, believing each of them to be true, because she wanted the respondent to do something about the complaints.
The applicant also reiterated at trial her allegations in the 21 June letter of sexual misconduct by Mr Holmes, including his alleged sexual harassment of the applicant herself in Hong Kong and a number of additional alleged instances of misconduct directed at other employees.
The applicant submitted that even if the allegations she made against Mr McIndoe in the 21 June letter could not be substantiated, he was, as he conceded, outraged by her conduct in making them, and his resentment contributed significantly to his decision to terminate her employment. The applicant submitted that the confected nature of her redundancy was demonstrated by the short interval of time between her return to work in October 2011 (after settlement of the disputes arising from the 21 June letter) and her dismissal in February 2012. Further, Mr McIndoe failed to obtain any third party’s written recommendation to implement the restructure which led to her redundancy and did not implement a review of the restructure as required by the “TRUenergy Group Company Management Authority Manual”.
The applicant submitted that it was implausible that a genuine restructure would result in the redundancies of only herself and her executive assistant, as occurred in this case. The applicant submitted that the appointment, shortly after her redundancy, of a new employee, Clare Savage, whose responsibilities ultimately mirrored her own, demonstrated that the redundancy was contrived.
The respondent denied any contravention of the Act. While acknowledging that dismissing the applicant from her employment would constitute adverse action, the respondent denied, on various bases, that some of the alleged complaints were made in the terms pleaded and denied that any of the five alleged complaints was a complaint that the applicant was able to make in relation to her employment. The respondent submitted that the fourth, most significant, complaint, in particular, was not a valid complaint that the applicant made in good faith in relation to her employment but rather, consisted of grave accusations of serious misconduct by other employees which were largely based only on rumour or gossip and were intended illegitimately to pressure Mr McIndoe to accede to the applicant’s excessive demands.
More fundamentally, the respondent submitted that it had discharged the onus cast upon an employer by s 361 of the Act where complaints within the meaning of s 341(1)(c)(ii) of the Act were made, as the evidence established that none of the alleged complaints in this case (even if, contrary to the respondent’s submission, they were complaints within the meaning of the provision) played any relevant role in the decision to make the applicant’s position redundant. The decision was, the respondent submitted, a bona fide response to real and urgent commercial imperatives and was not influenced by the making of the complaints.
The respondent submitted that the first, second, third and fifth complaints were clearly immaterial to the applicant’s dismissal. Further, although Mr McIndoe was angered by the allegations of serious misconduct made against him in the 21 June letter (the fourth complaint), he engaged in lengthy negotiations to resolve the dispute, ultimately accepted the applicant’s personal apology, “wiped the slate clean” and orchestrated a formal settlement with the applicant, with whom, after her return to work, he maintained a courteous and appropriate professional relationship.
The respondent submitted that Mr McIndoe’s testimony that he acted for legitimate management reasons rather than smouldering resentment of the applicant’s accusations was supported by evidence of the urgent business problems addressed by the restructure which led to the applicant’s redundancy. Further, Mr McIndoe did not require a written recommendation for the restructure. His power to implement it was not subject to obtaining a review. Nor was Ms Savage effectively a replacement who, in substance, performed the applicant’s former role.
Summary of principal findings
I concluded, for reasons set out below, that in the context of s 341(1)(c)(ii) of the Act:
(a)a complaint is a communication which, whether expressly or implicitly, as a matter of substance, irrespective of the words used, conveys a grievance, a finding of fault or accusation;
(b)the grievance, finding of fault or accusation must be genuinely held or considered valid by the complainant;
(c)the grievance, finding of fault or accusation need not be substantiated, proved or ultimately established, but the exercise of the workplace right constituted by the making of the complaint must be in good faith and for a proper purpose;
(d)the proper purpose of making a complaint is giving notification of the grievance, accusation or finding of fault so that it may be, at least, received and, where appropriate, investigated or redressed. If a grievance or accusation is communicated in order to achieve some extraneous purpose unrelated to its notification, investigation or redress, it is not a complaint made in good faith for a proper purpose and is not within the ambit of s 341(1)(c)(ii);
(e)a complaint may be made not only to an external authority or party with the power to enforce or require compliance or redress, but may be made to persons including an employer, or to an investigator appointed by the employer;
(f)a complaint that an employee is able to make in relation to his or her employment is not at large, but must be founded on a source of entitlement, whether instrumental or otherwise; and
(g)a complaint is limited to a grievance, finding of fault or accusation that satisfies the criteria in s 341(1)(c)(ii) and does not extend to other grievances merely because they are communicated contemporaneously or in association with the complaint. Nor does a complaint comprehend contemporaneous or associated conduct which is beyond what is reasonable for the communication of the grievance or accusation.
For the reasons discussed in more detail below, I have found that the first, second and third complaints were not made in the terms alleged and that the fifth complaint was not, viewed in context, a complaint, but an observation or assertion. Further, although the most significant fourth complaint was made as alleged, it was not a complaint that the applicant was able to make in relation to her employment. I have found, in that context, that there was, on the evidence, no reasonable basis for:
(a)the applicant’s specific allegations made in the 21 June letter of misconduct by Messrs McIndoe and Purvis, her additional specific allegations of misconduct by Mr Holmes towards other employees and her general allegations of a corporate culture in which sexual harassment was condoned;
(b)the applicant’s additional allegations at trial of misconduct by Mr McIndoe;
(c)the applicant’s allegation of misconduct by Mr Merrick made in the course of the litigation; and
(d)the applicant’s allegations that the misconduct of Messrs McIndoe, Holmes and Purvis motivated them to give false evidence to the Mercuri investigation and to collude to subvert the outcome of the investigation.
I have also concluded that there was no reasonable basis for the applicant’s allegation, in the 21 June letter, essentially based on the above allegations, that the Mercuri investigation was flawed because it accepted false evidence, failed to investigate further allegations of misconduct by Mr Holmes or was inadequately reasoned. I was not satisfied that the applicant genuinely held those stated grievances or, in all the circumstances, that she communicated them in good faith for a proper purpose. Accordingly, while I have found that the applicant was able to make, in relation to her employment, a bona fide complaint that the investigation of and report on her allegation of sexual harassment in Hong Kong were flawed on the grounds stated, the fourth complaint was not such a complaint.
While, as discussed below, I have found that the applicant made a complaint that she was able to make which was a variant of the pleaded second complaint, I have found that neither that complaint nor any of the alleged complaints (even had they been made in the terms pleaded) were a substantial and operative or immediate reason for Mr McIndoe’s subsequent decision to make the applicant’s position redundant.
The first, second, third and fifth complaints (even if they were made as pleaded and were complaints within the meaning of s 341(1)(c)(ii)) and the varied second complaint, did not, in my opinion, constitute a reason or a part of the reason, for Mr McIndoe’s decision to make the applicant’s position redundant. Moreover, save for the fifth complaint, each of the above complaints had little independent reach as it was in substance repeated in or subsumed by the fourth complaint.
Although the fourth complaint was made in the terms pleaded, even if it were (contrary to my finding) a complaint that the applicant was able to make within the meaning of s 341(1)(c)(ii), I was not persuaded that Mr McIndoe was actuated by continuing resentment of its content, including the accusations against him and others made in the 21 June letter or by the applicant’s related conduct in making the fourth complaint, when (after lengthy negotiations, a settlement and the applicant’s return to work during which the disputed issues did not re-emerge) he subsequently decided to make the applicant’s position redundant.
As Messrs Purvis and McIndoe acknowledged, they did not resume their former intimate personal friendship with the applicant when she returned to work after accusing them of misconduct. I was persuaded, however, that the interpersonal conflict between Mr McIndoe and the applicant and the workplace disputes centred on the 21 June letter were settled in October 2011 and appropriately civil, professional relationships continued upon the applicant’s return to work.
As the applicant acknowledged, following her return to work, the respondent’s business faced an aggravation of continuing problems and resultant pressure from relevant regulatory authorities which required urgent organisational change. I accepted Mr McIndoe’s testimony, supported by that of Messrs Purvis and Merrick and a number of facts established on the evidence, that the responsive changes he decided upon, which resulted in the applicant’s redundancy, were made for the reasons to which he testified and were not actuated wholly or in part by personal resentment of, or as retribution for, any of the pleaded complaints made by the applicant.
Accordingly, I concluded that no contravention of the Act was established.
The witnesses
The following witnesses gave evidence on behalf of the applicant:
(a)Kate Shea, the applicant;
(b)Marc Carden, the applicant’s husband;
(c)Siobhan Sharkey, who was formerly employed as the applicant’s executive assistant and who was dismissed by the respondent at the same time as the applicant; and
(d)William (Bill) Patullo of Oppeus International Pty Ltd, who prepared expert reports dated 14 December 2012, 28 May 2013 and an outline of evidence dated 27 June 2013 which was, by agreement, tendered as a further expert witness report in reply.
The following witnesses gave evidence on behalf of the respondent:
(a)Richard McIndoe, the respondent’s managing director;
(b)Kevin Holmes, a former director and Chief Financial Officer of the respondent, whom the applicant accused of sexual harassment in Hong Kong in February 2010, and who, after entering a separation agreement with the respondent in July 2011, ceased to work for it in March 2012;
(c)David Purvis, the respondent’s former Director of Human Resources, who was previously a close personal friend of the applicant and whose employment with the respondent ceased on his resignation in March 2012;
(d)Adrian Merrick, who commenced employment as Director of the respondent’s Retail unit in May 2011; and
(e)Guy Farrow of Heidrick & Struggles, who prepared expert reports dated 3 April 2013 and 14 August 2013 on behalf of the respondent.
The respondent also filed outlines of evidence of its employees, Linda Robertson, David Lambert, Lisa D’Angelo, Byron Tidswell and James Chisholm, on behalf of Ms Mercuri, and an expert report of Mike Hogan of Ernst & Young dated 24 April 2013. The above were not called to give evidence and their outlines of evidence and Mr Hogan’s expert report were not tendered.I was not, however, persuaded that, as the applicant submitted, an adverse inference should be drawn against the respondent due to its failure to call those persons, or officers of its parent company CLP Holdings Ltd, in circumstances where Mr McIndoe was the sole decision‑maker, the other potential witnesses were peripheral and the trial was otherwise likely to exceed its allocated time.
Ms Shea, the principal witness on her own behalf, was not, in my opinion, an impressive, persuasive or reliable witness. Even allowing for the considerable personal strain clearly associated with the litigation, she was not candid, forthcoming or responsive. She frequently professed an inability to recall, which appeared selective, as she could not remember many significant details of a particular event whilst clearly recalling a particular detail which appeared to serve her case. Ms Shea was frequently unresponsive in cross‑examination and failed to answer the questions put to her. Her testimony tended to be argumentative and defensive. She was rarely prepared freely to make apparently appropriate concessions. In one instance, for example, when confronted with written evidence that appeared to refute her oral evidence, Ms Shea responded with unpersuasive distinctions designed to avoid a concession. Ms Shea’s evidence at some points was inconsistent with evidence she gave at other points of the trial or with statements she had previously made to other witnesses and during the Mercuri investigation.
Mr Carden gave evidence for a short time during which he appeared unwell. He was frankly supportive of the applicant’s case and at points his testimony appeared somewhat studied.
Ms Sharkey presented as a measured and truthful witness. She did not deny that her employment was terminated at the same time as that of Ms Shea, her close relationship with Ms Shea or her legal action against the respondent in relation to her own dismissal.
Mr Patullo was a measured, sensible and conscientious expert witness who made appropriate concessions.
Mr McIndoe was an impressive, conscientious and credible witness. He was candid, forthcoming, dignified and fully responsive in the course of lengthy and rigorous cross‑examination on very personal subject‑matter which clearly imposed great strain. His responses were deliberate, frank and straightforward. His evidence was generally consistent with contemporaneous documents. He frequently made appropriate concessions and was not defensive or argumentative.
Mr Holmes was a credible and dignified witness. He was clear, direct and detailed in his responses under sustained cross‑examination, the subject matter of which was deeply personal and potentially humiliating. His evidence was generally consistent both during the trial and with his previous statements to other witnesses.
Mr Purvis was an impressive witness. He was firm, clear and direct in his responses. He had a good recall of the relevant events and provided a comprehensive and consistent account, together with specific details.
Mr Merrick was a credible and honest witness. Although his responses tended to be discursive, they were frequently responsive to open ended questions.
Mr Farrow gave expert evidence in relation to steps that could be taken and the probable time required to find a position comparable to the applicant’s position with the respondent and the likelihood of finding such a position. He also gave evidence in relation to the impact of termination for redundancy and litigation against a former employer on an individual’s reputation and ability to find such a position. While his evidence was of assistance, Mr Farrow failed to disclose in his expert reports that he prepared the reports without charge, paid for his own travel and attendance at Court and had undertaken work for the respondent in the past year or two. The omission of matters relevant to his independence may reflect on Mr Farrow’s judgment or candour and went to weight. Independence is not a necessary qualification for an expert witness: Ananda Marga Pracaraka Samgha Ltd v Tomar (No 4) [2012] FCA 385.
The Facts
The applicant
The applicant, Ms Shea, who at the time of trial was aged 47, has post‑graduate degrees in arts and marketing and a diploma from the Australian Institute of Company Directors. Prior to her employment with the respondent, she was employed by a number of different organisations as a consultant in or manager of public affairs, public relations and corporate and investor relations, including in senior level positions in prominent companies. Ms Shea was employed by the respondent for a total of about five years, initially pursuant to a contract dated 8 December 2006. She commenced her employment in January 2007 and was dismissed on 6 February 2012.
The respondent
The respondent is the employer entity within an Australian corporate group (“EnergyAustralia”) which is a large producer and retailer of energy engaged in the business of power generation. For convenience, in these reasons, unless otherwise indicated, reference to the respondent includes the EnergyAustralia group. The group’s ultimate parent company, CLP Holdings Ltd (“CLP”), is listed on the Hong Kong stock exchange. The respondent has operations in at least four Australian states and employs approximately 2,500 people in its Australian operations. It has approximately 2.8 million Australian customers. The respondent holds significant power generation assets. Its total asset value in Australia is about $9 billion and its net assets total about $4.4 billion.
At all material times, the respondent’s managing director was Mr McIndoe. Mr McIndoe, who was aged 48 at the time of trial, commenced his employment with the respondent in 2006. Prior to joining the respondent, Mr McIndoe ran CLP’s international business from 2002 to 2006. Prior to that, he was employed by various organisations including an investment bank and a power development company in Hong Kong.
At all material times, the respondent’s relatively flat management structure consisted of, at the apex, a managing director with wide management powers to whom seven or eight senior executives, each heading a separate business unit, reported directly. Together, the managing director and senior executives (referred to as “Directors”), comprised the executive management team. While there was some change in the names and scope of the functions of the respondent’s business units over time, broadly speaking, between 2008 and February 2012, they were as follows:
(a)the Finance unit, headed by the Chief Financial Officer, who, from October 2009, was Kevin Holmes. Mr Holmes’ employment with the respondent commenced in October 2009. After entering a separation agreement in July 2011, he ceased to work for the respondent in March 2012.
(b)the General Counsel and Company Secretary unit, headed by the General Counsel and Company Secretary, who, from about mid-2010, was, and at the time of trial remained, David Lambert;
(c)the Operations and Construction unit, headed by its Director, Michael Hutchinson (who maintained that position at the time of trial);
(d)the Energy Markets unit, headed by its Director, Mark Collette (who maintained that position at the time of trial);
(e)the Retail unit, headed by its Director, who, from May 2011, was, and at the time of trial remained, Adrian Merrick;
(f)the Corporate Risk (which became Information Services) unit, headed by its Director, Gary Martin, whose position was made redundant in 2013;
(g)the Corporate and Government Affairs unit, headed by its Director, Kate Shea; and
(h)the Human Resources unit, headed by its Director, David Purvis, who was employed from February 2008 until his resignation in March 2012.
An audit manager, Tony Duff, held a senior appointment but did not belong to the executive management team. Mr Duff reported to the “Head CLP Group Internal Audit” and, on a “dotted line”, to the managing director.
The respondent’s business units consisted of an average of around eight or nine persons reporting directly to the Director of that business unit. Only three of the units (Energy Markets, Retail and Operations and Construction) generated revenue and profits. The remainder of the units supported the company’s revenue generating activities.
The respondent’s board of directors at all times comprised Mr McIndoe and various other persons. During the period relevant to this proceeding, the board comprised, in addition to Mr McIndoe, Mr Martin (from August 2008 to April 2011) and Mr Holmes (from March 2010 to February 2012). As at the date of the trial the board comprised Messrs McIndoe, Hutchison and Merrick.
The “TRUenergy Group Company Management Authority Manual” (“Manual”) approved on 15 August 2011 by the board of TRUenergy Holdings Pty Ltd (“Holdings”) stated, inter alia, that the board of Holdings had approved the Manual for the operation and management of the TRUenergy group of companies (“TRUenergy Group”) and to document certain activities. The Manual provided that the board of Holdings had:
delegated general authority to the Managing Director of the TRUenergy Group to manage, control and direct the business of the TRUenergy Group, while reserving authority in respect of certain matters which are required under this [Manual] to be approved by the Board [of Holdings], other boards or committees or nominated officers of [the CLP Group]”:
The Manual stated:
This [Manual] is subject to the following principles:
(a)The Managing Director of the TRUenergy Group is responsible for the overall administration of the TRUenergy Group, and must ensure that decisions of the Board [of Holdings] and the relevant committees are executed and that the requirements of this [Manual] are met.
…
(e)In all its activities, the TRUenergy Group must comply with its policies and procedures and also with the CLP Group polices and procedures, as issued from time to time.
The Manual provided that the managing director should ensure that all necessary reviews and endorsements were completed and documented. Questions relating to the interpretation of the Manual were to be referred to the managing director, who would determine whether further clarification should be sought. The Manual set out a number of authorities in relation to organisation and human resources, including:
(a)For the restructure of the respondent’s organisation at senior executive level, the respondent’s Director of Human Resources and CLP’s Director of Group Human Resources were to review, and the respondent’s managing director was to approve.
(b)For the employment, termination, secondment and summary dismissal at senior executive level, the respondent’s Director of Human Resources and CLP’s Director of Group Human Resources were to review, and the respondent’s managing director was to approve.
The Manual provided that all reviews and approvals must be in writing.
James Chisholm was the respondent’s head of Risk and Compliance (which sat within the Finance unit) and was, at the time of the trial, the respondent’s General Manager of Financial Operations. Byron Tidswell, the manager of Enterprise Risk, reported to Mr Chisholm.
The applicant’s role in the respondent’s business
Ms Shea was employed by the respondent as the Director of Corporate Affairs pursuant to a contract of employment dated 8 December 2006. Ms Shea (who was then working for Orica Ltd in Sydney) was introduced to Mr McIndoe by her close friend, Amanda Barnett (who was then the respondent’s general counsel). Ms Shea was employed after being interviewed by Mr McIndoe at his invitation.
For a time (from June 2006 to August 2007, when she left the respondent) Ms Barnett was also a director of the respondent. It was common ground that Ms Barnett, was, at the time (from 2005 to 2008), involved in an intimate personal relationship with Mr McIndoe, who, although married, lived in Australia until January 2007 without his wife and children who resided in Hong Kong. Ms Barnett and Mr McIndoe both confided in Ms Shea, with whom they discussed their relationship. According to Ms Shea, the relationship lasted until 2008 or perhaps 2009 and was widely known within the company although “they tried to keep it concealed”.
When she commenced her employment, and at all times thereafter, Ms Shea reported directly to Mr McIndoe.
Although there was no position description for her role when she commenced her employment, at some time prior to the expansion of her role in mid-2008, Ms Shea wrote a description of her position as “Director Corporate Affairs” reporting to the managing director, with the following purpose:
To enhance and protect TRUenergy’s reputation through the strategic management of media relations, employee communications, brand strategy and community partnerships and sponsorships.
This includes providing expert advice to the Leadership Group on communication and reputation issues and providing strategic input to projects and strategic interventions.
Ms Shea’s duties in that capacity included managing communications, which were made both at a personal level and through media releases, with government regulators, employees and other stakeholders. As a member of the executive management team, she headed a unit of, at its peak, approximately 10 persons, assisted, from 5 May 2008, by an executive assistant, Siobhan Sharkey. Ms Shea was, at all times prior to her dismissal, the most senior woman employed by the respondent and the only female member of the executive management team.
Ms Shea testified that her corporate affairs role principally involved dealing with the media, employees and sponsorship. She was mainly concerned with protecting and enhancing the respondent’s corporate reputation and managing associated risks. Communications with “external and internal stakeholders” were central to her job.
Ms Shea was paid a fixed annual sum which was reviewed in April annually and also received a bonus (an annual incentive payment).
Ms Shea’s contract, made on 8 December 2006, relevantly provided:
6. Remuneration
Your Fixed Annual Remuneration (FAR) is set out in the attached Schedule. You acknowledge that your remuneration generally is paid to you in satisfaction of any entitlement to allowances, overtime payments or other penalty rates that you may have arising from any industrial instrument that may be applicable to you.
The Base Salary component of your Fixed Annual Remuneration will be payable in arrears.
Fixed Annual Remuneration is reviewed annually in accordance with Company policy. Any increases in your Fixed Annual Remuneration (FAR) will be primarily dependent on your overall performance in the opinion of the Managing Director and/or relevant Manager in fulfilling role requirements and performance objectives. Adjustments will also take into consideration relevant salary market movement, organisational effectiveness and capacity to pay.
…
8. Reward
You will be eligible to be considered for and participate in the Company’s Annual Incentive Plan (AIP) in accordance with Company Policy at the nominated target % detailed in the attached Schedule. Incentives are pro rated from date of eligibility/entry during a Plan cycle and targets are set in consultation with you and your manager at the start of a Plan year.
The Annual Incentive Plan – 2007 (excluding Retail), scheduled to Ms Shea’s contract, provided that her incentive plan would be determined when the respondent’s financial results were released and approved. The amount was calculated, usually in April, on the basis of Ms Shea’s fixed annual remuneration as at 31 December and was referable to the preceding plan year of 1 January to 31 December. A pro rata adjustment would be made if Ms Shea’s target value changed during a plan year.
On or about 1 April 2007, Mr McIndoe wrote to Ms Shea confirming that her current level of remuneration and all other terms of employment would remain unchanged. He confirmed her total annual reward of $312,686. The letter attached a remuneration statement that set out Ms Shea’s remuneration, effective on 1 April 2007, as an annual base salary of $250,000 and employer superannuation contribution of $12,686 (totalling a fixed annual remuneration of $262,686) and an annual incentive plan, at a target of 20% of base salary, of $50,000.
On or about 1 April 2008, Mr McIndoe confirmed that Ms Shea’s 2007 annual incentive payment (referable to the calendar year 1 January to 31 December 2007) would total $75,000 to be paid on 15 April 2008. The letter also provided details of the annual incentive plan for 2008, increased Ms Shea’s annual incentive plan entitlement at target to 25% effective on 1 April 2008 and confirmed that her fixed annual remuneration would increase to $275,000 per annum effective on 1 April 2008. The letter enclosed a total annual reward schedule, which set out Ms Shea’s remuneration effective on 1 April 2008 as an annual base salary of $275,000 and employer superannuation contribution (at 10%) of $25,000 (a total fixed annual remuneration of $275,000) and an annual incentive plan, at a target 25% of base salary, of $62,500, giving Ms Shea a total annual reward (fixed annual remuneration plus her annual incentive plan at target) of $337,500.
Ms Shea testified that when she commenced her employment, she told Mr McIndoe of her eagerness to assume the role of investor relations after the respondent’s intended public listing or “float”, which she believed would occur in September 2007. (In fact, the public listing did not occur then and had not occurred at the time of trial.) Ms Shea stated that Mr McIndoe told her that there was no reason why she should not have the investor relations role if she performed well as the Director of Corporate Affairs, which she construed as a promise to confer the role.
Ms Shea’s second contract of employment with the respondent was executed in 2008 and provided that, from 1 July 2008, she would be the Director of Corporate & Government Affairs.
As the change in her title indicated, from May 2008, Ms Shea assumed an expanded role covering government and retail regulatory functions. In particular, Ms Shea testified that the expanded role included dealing with the Federal government, largely in relation to carbon policy. Ms Shea stated that “at the time, the Carbon Pollution Reduction Scheme was being hotly debated in Canberra” and, as the respondent had a brown coal power station, it was “a critical piece of legislation for [the respondent]”. Ms Shea testified that government relations involved communication with government Ministers and their chiefs of staff, advisers and bureaucrats about proposed and existing policy legislation and regulation.
Ms Shea testified that from 2008, her role also involved an element of investor relations (chiefly with the Hong Kong parent company’s investor relations team) and dealing with investment analysts who were interested in the respondent as a comparator to its listed competitors, AGL and Origin.
Ms Shea’s new employment contract substantially replicated the remuneration and annual employee incentive plan of her previous contract. Schedule 3 to the contract set out Ms Shea’s remuneration and benefits package effective 1 April 2008 as an annual base salary of $250,000 and employee superannuation contributions of $25,000 (a total fixed annual remuneration, excluding incentive, of $275,000), and an annual incentive plan, at a target of 35% of base salary, of $87,500, giving Ms Shea a total annual reward (fixed annual remuneration plus annual incentive at 35%) of $362,500.
On 1 April 2009, Mr McIndoe confirmed approval of Ms Shea’s guaranteed bonus payment for the period 1 January to 31 March 2008 based on an organisational performance score of 100% and an individual performance score of 200%. He confirmed Ms Shea’s gross annual incentive payment of $98,076 referable to the period 1 April to 31 December 2008, to be paid on 3 April 2009. Mr McIndoe advised that Ms Shea’s fixed annual remuneration would increase to $280,500 per annum effective on 1 April 2009.
On 1 April 2010, Mr McIndoe advised Ms Shea that her total inclusive gross annual incentive payment was $139,096 for the 2009 calendar year and her fixed annual remuneration was increased to $291,720 per annum effective 1 April 2010, both to be paid on 1 April 2010.
By September 2010, Ms Shea’s unit was structured as follows: '
On 1 April 2011, Mr McIndoe advised Ms Shea that her gross annual incentive plan payment was $165,962 and her fixed annual remuneration was increased to $330,050 per annum effective 1 April 2011 (which remained her rate of remuneration up to the termination of her employment), both to be paid in the first week of April 2011.
The relationship between Ms Shea and Mr McIndoe
It was common ground that Ms Shea and Mr McIndoe enjoyed a friendly, professional and personal relationship throughout her employment, until about mid‑2011. In 2011, Mr McIndoe praised her as “the glue of the management team”. Ms Shea’s performance reviews were extremely positive and she was consistently awarded a substantial annual bonus.
Ms Shea testified that prior to about April 2011, she and Mr McIndoe got on well as good workplace friends who also discussed personal matters. Ms Shea testified that at work Mr McIndoe visited her office on “most days”. Ms Shea stated that through their discussion of personal matters, she was aware of some of his “indiscretions” and found that he made a lot of inappropriate comments about women. Until April 2011, Ms Shea considered that her relationship with Mr McIndoe was good.
At trial, Ms Shea at one point testified that her friendship with Mr McIndoe was confined to the workplace and they did not see each other socially. Ms Shea acknowledged that she occasionally had dinner with Ms Barnett but denied that Mr McIndoe was present.
In contrast, Mr McIndoe testified that his relationship with Ms Shea extended to social occasions, as they had lunch together each month and met for drinks after work at several favourite venues. He and Ms Barnett as a couple also socialised with Ms Shea at lunch and after work. They had dinner with Ms Shea and her husband at Ms Barnett’s house, and on one occasion, the couples stayed together overnight at Ms Barnett’s holiday house at Portsea.
Mr McIndoe testified that when he met Ms Shea socially, including for lunch or drinks, they discussed extremely personal matters, including intimate medical problems and Mr McIndoe’s relationship with Ms Barnett, to which Ms Shea was quite sympathetic. Mr McIndoe also occasionally sent friendly greeting cards to Ms Shea and her family members, and presented her new baby with a gift.
Despite her initial denials, Ms Shea ultimately conceded that she discussed very personal matters with Mr McIndoe during lunch or drinks after work and acknowledged that they had stayed together at Ms Barnett’s holiday house.
While Ms Shea (ultimately) acknowledged that she enjoyed a friendly working relationship with Mr McIndoe, she testified that occasionally he spoke about women, including their appearance, in sexist or inappropriate terms which made her uncomfortable, although she said nothing at the time. Ms Shea nevertheless conceded that her relationship was such that she could speak freely to Mr McIndoe and it was also part of her role to monitor and protect his public image and reputation. She acknowledged that she voluntarily spent time in his company and expressed her satisfaction in working with him.
Mr McIndoe denied that he made improper or obscene comments as alleged. This is discussed in detail below.
Although Ms Shea attempted to minimise the confidential and voluntary social aspects of her relationship with Mr McIndoe, I am satisfied that prior to mid‑2011, they enjoyed a strong professional relationship which extended to friendship at a social and personal level. Ms Shea and Mr McIndoe shared, in Ms Barnett, a confidential “best friend” and intimate partner respectively. They voluntarily met socially outside the workplace on numerous occasions and their relationship involved considerably greater personal intimacy, familiarity, social contact and confidential exchanges than would be typical of a merely cordial working relationship between a managing director and a senior executive.
The Hong Kong incident
In February 2010, Ms Shea and Messrs Holmes and McIndoe were in Hong Kong to attend business functions involving the respondent’s parent company, CLP.
It is common ground that all three persons attended a dinner organised and hosted by Mr McIndoe for CLP personnel at the China Club in Hong Kong. The dinner was preceded by drinks commencing around 6.30 pm. After dinner concluded at about 11 pm, a number of people, including Messrs McIndoe and Holmes and Ms Shea, proceeded to the “Mes Amis” night club with CLP personnel in a large private car. At some time after 12.30 am, all of the party departed, save for Mr Holmes and Ms Shea, who walked together to another bar, where they engaged in conversation. In the course of the conversation, Mr Holmes touched Ms Shea physically. The nature of the physical contact and Mr Holmes’ related conduct is disputed. Ms Shea contends that Mr Holmes stroked her hair, neck and thighs in what was, in effect, an unwelcome sexual advance. Mr Holmes contends that he put his arm around or touched Ms Shea’s back or neck in a consoling manner after Ms Shea confided to him details of her husband’s serious illness. The disputed accounts of the incident (“the Hong Kong incident”) are discussed in detail below.
After spending time in the second bar, at (according to Ms Shea’s testimony) about 3 am, Mr Holmes and Ms Shea returned together in a taxi to the hotel where both were staying. Ms Shea then awoke her husband, who was also staying at the hotel, and informed him of the incident.
On or about the following day, Ms Shea informed Peter Greenwood, an officer of CLP, with whom she was friendly, of the Hong Kong incident. Ms Shea did not give evidence of the terms in which she informed Mr Greenwood, who was not called as a witness in the proceeding.
Shortly after returning to Melbourne from Hong Kong, Ms Shea informed Mr Purvis, the respondent’s Human Resources Director, of the Hong Kong incident. Mr Purvis also happened to be Ms Shea’s close personal friend, whom she had known since their university days. According to Ms Shea, their friendship went back “a long time” and they had once shared a house together. Mr Purvis agreed that he was a longstanding and “extremely close friend” of Ms Shea, whom he had known for around 25 years. Mr Purvis and Ms Shea gave conflicting accounts of the terms in which Ms Shea described to Mr Purvis the Hong Kong incident and her subsequent exchange about it with her husband.
Ms Shea testified that she told Mr Purvis that “Kevin Holmes had made inappropriate advances towards me” or words to that effect, to which Mr Purvis responded that Mr Holmes was “a sleaze”. Ms Shea said that she told Mr Purvis both in his capacity as the Director of Human Resources and as an intimate friend. She testified that she “felt more comfortable talking to [Mr Purvis] because he was a close friend but I probably would have mentioned it to any HR director”.
Mr Purvis testified that Ms Shea first told him of the Hong Kong incident about a couple of weeks after her return from Hong Kong. He had previously seen her a number of times in the office. According to Mr Purvis, Ms Shea came to his office, closed the door and indicated that “Mr Holmes had propositioned her”.
In cross-examination, Mr Purvis added that Ms Shea stated that Mr Holmes “had touched her hair and her shoulder”. Mr Purvis’ failure to add that detail in examination‑in‑chief (for which he was criticised by senior counsel for the applicant) did not, in my view, reflect on his candour or suggest an attempt to withhold the information. His answer to a question on what Ms Shea said to him in their meeting was overtaken by a question about his response to her initial remark.
Mr Purvis testified that he was concerned by Ms Shea’s revelation and asked whether she were upset and wanted the matter to be investigated. He also asked about her husband’s reaction. According to Mr Purvis, Ms Shea stated that she did not wish to complain, to have the matter investigated or to have other action taken. She told Mr Purvis that when she woke her husband and told him of the incident, he rolled over and went back to sleep. She told Mr Purvis that her husband was “fine with [it]”. Ms Shea also said that she had informed Mr Greenwood of the incident.
Mr Purvis denied that he had ever held the opinion or stated that Mr Holmes was “a sleaze”.
At an early stage, Ms Shea also told Ms Barnett, who was no longer employed by the respondent, of the Hong Kong incident. Ms Shea testified that she telephoned Ms Barnett in Melbourne the day after the incident occurred. Ms Shea did not give evidence of the precise terms in which she informed Ms Barnett of the incident. Ms Barnett was not a witness in the proceeding.
Ms Shea also told David Markham, who was a member of her team and reported directly to her, at some point in time during the week after she returned from Hong Kong. Ms Shea did not give evidence of the precise terms in which she informed Mr Markham of the Hong Kong incident. Mr Markham was not a witness in the proceeding.
In cross-examination, it was put to Ms Shea that she told Ms Barnett and Messrs Carden and Purvis that Mr Holmes had “hit on” her or “made a pass” at her. Ms Shea agreed that, while she may not have used exactly the same words, she would have told Ms Barnett and Messrs Carden, Purvis, Greenwood and Markham the same thing in relation to what had occurred. It was put to Ms Shea that she did not tell Ms Barnett that she had been sexually assaulted or harassed, but rather that she had been “hit on”, to which Ms Shea responded “I don’t see what the difference is”. When asked whether she had used the phrase “hit on”, Ms Shea testified that she could not recall the words she had used. Ms Shea was taken to Ms Barnett’s email to Mr McIndoe, dated 17 March 2011, where Ms Barnett stated: “He hit on her”. Ms Shea observed that it is “a common expression”. It was clear from the email that Ms Barnett was referring to Mr Holmes and Ms Shea.
Ms Shea did not mention the Hong Kong incident to Mr Holmes at all until about 14 months later, in about April 2011. She continued to work together with Mr Holmes, attended workplace social functions at which he was present and on one occasion left an event walking with Mr Holmes. There was no evidence that Ms Shea avoided being in Mr Holmes’ company. Mr Holmes testified, and I accept, that in July or August 2010, they attended an evening farewell function for Carlo Botto, the director of portfolio management, left the function together and walked from Flinders Lane to the corner of Bourke and Elizabeth Streets after which they continued talking for about five minutes. Ms Shea was unable to recall any details of the evening and while certain that she would not have left the function with Mr Holmes, accepted that he may have “caught up” with her as she was walking.
Other than for Mr Greenwood of CLP and Mr Purvis and Ms Barnett, who were both personal friends, and her close colleague Mr Markham, Ms Shea did not raise the Hong Kong incident with any person employed by or associated with the respondent until around April 2011.
Workplace developments after the Hong Kong incident
When Ms Shea commenced her employment with the respondent, its investor relations work was quite limited, as its only investor was its sole corporate shareholder within the CLP group. Investor relations work would, however, greatly expand if, as it was contemplated, the company were listed on the Australian stock exchange in future. From the outset, Ms Shea was keen to assume the management of investor relations after the respondent’s public listing. Mr Holmes, however, took the view that after the listing he, as Chief Financial Officer, should manage the investor relations role within the Finance unit.
In consequence, as at 2011, Ms Shea and Mr Holmes were competing to secure the investor finance function after the public listing of the respondent, which was then anticipated to take place in November 2012.
Ms Shea made clear to Mr McIndoe that she wanted the investor relations position. She testified that Mr McIndoe told her “[i]f you perform well in the corporate affairs function, I can see no reason why I wouldn’t give you the investor relations role”. Ms Shea initially testified that she viewed Mr McIndoe’s statement as a promise (albeit conditional on her performance in the corporate affairs role) but ultimately described it as “a commitment”.
Mr McIndoe denied that, from the outset, he promised Ms Shea the investor relations function in the event that the company were listed. He agreed that Ms Shea had flagged her interest in investor relations but stated, “we were not a listed company at the time, so it was not a relevant area of the business”.
Mr McIndoe acknowledged that he thought well of Ms Shea and regarded her as very accomplished in media and communications. He considered that she had handled the introduction of the carbon tax better than other media units.
It is nevertheless clear that even on Ms Shea’s own account of her relevant exchanges with Mr McIndoe, he made no promise, commitment (or statement that could reasonably be construed as such) to allocate the investor relations function to her after the anticipated public offer.
In February 2011, CLP requested Mr McIndoe to make a presentation to investors in Hong Kong in March 2011. Mr McIndoe asked Ms Shea and Mr Holmes to put together the presentation, assuming that each would contribute to a single work. Contrary to Mr McIndoe’s expectations, Ms Shea and Mr Holmes each provided Mr McIndoe with a separate presentation.
On 9 March 2011, Ms Shea sent an email to Mr Markham (the most senior person in her unit after Ms Shea herself) which stated: “Getting between me and investor relations is going to be like ‘getting between Christine Milne and a tv camera’”.
Also on 9 March 2011, Ms Shea responded to an email from Mr Markham attaching an image with the subject line “Re: Thought you’d like a picture of these two (Tim and Julia, not those other two!)” and stated:
Urrrggggghhhhhhhhhhh yuck!
By the way, the JBF look is not possible. She’s just too much of a dog.
While the photograph to which the email referred was not in evidence, the respondent alleged, and Ms Shea agreed, that the subject line “Tim and Julia” referred to the then Prime Minister, Julia Gillard, and her partner. The respondent alleged that “JBF” was an acronym for an obscene phrase. Ms Shea, although the author of the email, testified, implausibly in my view, that she did not recall the meaning of “JBF”. While I am unable to reach a conclusion on the meaning of “JBF”, Ms Shea’s description in her email to Mr Markham of the then Prime Minister as a dog was, in my opinion, insulting and misogynist. (This finding is relevant to Ms Shea’s contention that Mr McIndoe used sexist, demeaning language about women which made her uncomfortable and to whether relief in the form of reinstatement would be an appropriate remedy in this case.)
On 15 March 2011, having received two different investor relations presentations rather than the expected single presentation, Mr McIndoe told Ms Shea that he was frustrated because she and Mr Holmes had not worked together.
On 17 March 2011, Ms Barnett, who remained a close friend of Ms Shea after leaving the respondent, sent the following email to Mr McIndoe:
RM
There’s some background that’s gone on, and continuing to go on, that’s pretty significant – for Kate as well as for your own and TRUenergy’s perspective. Kate’s not willing to share these things with you as she’s determined to be judged on merit and she refuses to engage in a grubby smear campaign.
In terms of the background ...
It’s highly likely that Kevin is being driven by a personal vendetta against Kate ... He hit on her when you were all up in HK last year - She was wedged in a booth at Wanchai (with no easy escape route), and she told me at the time how shocked, trapped and repulsed she was. She obviously rejected the advances by leaving, but expressed her concerns to me about how the encounter might affect their working relationship going forward. She reported the matter informally, but as far as I’m aware, hasn’t mentioned it to others within the company.
I am also aware that Kevin made a clear, unwelcome and public advance on a female at last year’s Christmas party. From my own perspective, he leered at me, looking me up and down, when Kate, Purvis and I bumped into you guys in the foyer a few weeks ago. It was so obvious, and truly made my skin crawl.
In terms of what’s going on now ...
•Kate is aware that Kevin is making a concerted and widespread effort to discredit her around the company.
• Someone rifled through papers in Kate’s office 2 nights ago.
Kate is 100% loyal and dedicated - to CLP/TRUenergy and to you in particular. Part of her current role is to manage your reputation, and she’s determined to continue to deliver in the investor relations role. On the flipside, Brett is laughing behind Kevin’s back that “Kevin can’t even read a balance sheet”, and I was chatting to a highly respected guy from an infrastructure fund late last year - when I told him I’d worked at TRUenergy, one comment he made was how unimpressed he was that “they’re just not across the figures”.
So, I am writing because a personal and very grubby vendetta may result in someone who wishes to be judged on merit being detrimentally affected as well as your and TRUenergy’s credibility in the market being adversely affected.
PLEASE DO NOT LET ON TO KATE THAT I HAVE SHARED THE ABOVE WITH YOU ... She’d be furious and upset with me if she knew.
A
Mr McIndoe testified that Ms Barnett’s email alerted him for the first time to an alleged sexual advance by Mr Holmes to Ms Shea. He was surprised by the email as the incident had not been brought to his attention previously despite occurring over a year ago.
Ms Shea denied any role in or knowledge of the sending of Ms Barnett’s email. She could not recall providing information or allegations for Ms Barnett to pass on to Mr McIndoe. Ms Shea’s testimony about her involvement in the sending of Ms Barnett’s email was, in my opinion, very evasive. While Ms Shea may not have had advance knowledge of the sending of the email, I am satisfied that she provided Ms Barnett with detailed information about the Hong Kong incident, her workplace conflicts and the negative views of Mr Holmes, being aware that Ms Barnett would convey them to Mr McIndoe in some way. Ms Shea was aware, by June 2011 at the latest, that Ms Barnett had sent the email.
Ms Shea denied that by March 2011, she was determined to obtain the investor relations role and saw Mr Holmes as a rival. I am nevertheless satisfied that Ms Shea badly wanted, and was determined to obtain the investor relations role, for which she viewed Mr Holmes as her rival.
After receiving Ms Barnett’s email, on the same day Mr McIndoe spoke to Ms Shea. While Ms Shea had not previously mentioned the Hong Kong incident to him, Mr McIndoe asked her if she had a problem about working with Mr Holmes. He did not mention Ms Barnett’s email, as she had expressly requested him not to disclose it to Ms Shea. Ms Shea replied that although she had no problem in working with Mr Holmes, his Finance unit was “playing games” in relation to the two presentations.
Mr McIndoe responded that he was disappointed that he received two reports, rather than a single presentation, and that he expected the Finance unit and Ms Shea’s unit to work together.
On 17 March, following his meeting with Ms Shea, Mr McIndoe sent her an email, which stated:
Kate
I’m not sure you took away the key purpose of the discussion we just had and that troubles me. I know I was not as articulate as I should have been, so I’m going to try again and maybe I can do better by e mail:
•I don’t think you and your team are playing games. I am disappointed we ended up with 2 presentations, but this is a lesson to me to be clearer in what I am looking for. Probably a good reason to be “straight talking” in the future. I don’t think there is any lasting damage though.
•The presentation you did was very good and far more appropriate for equity investors. I have given my comments to Carl and I look forward to the final version. It will be a great basis for further presentations over the next few months.
•As regards the long term IR function, I frankly need some more time to think about this one. I also need to be better educated as to what the function needs to achieve and what skill sets are required. I will also talk to others outside the organisation. Given this is THE public face of the business and that we will be under such intense scrutiny in the first couple of years (Bernie Brookes of Myers told me this), I need to be very much on top of this at all times. Put another way, I will cut my cloth to suit the circumstances we are in, as opposed to being governed by preconceptions about how this is done elsewhere.
•I fully recognise that this is what you have done in the past and where your keen interest lies. We don’t need a formal equity IR group today, but I will continue to see you as responsible for my interaction with third parties, whether potential investors, public presentations etc. With the exception of the financial institutions, I do not expect finance to be giving separate presentations. Even in these circumstances, we need to have consistent messaging from the business so you will need to coordinate with Kevin’s group accordingly.
I hope this is clearer.
While the situation has frustrated me, I am much more concerned that you should understand that I value enormously your personal and professional advice. The fact that this has upset you, as it clearly has, is a huge worry to me so please let’s not allow this to have any detrimental effect on the way we work together.
R (x)
Mr McIndoe testified that as the meeting with Ms Shea had been “fraught” he concluded the email with a conciliatory “kiss”.
On 17 March 2011, Ms Shea sent a responsive email, as follows:
Thank you for the lovely email.
I really enjoy working with you and TRUenergy, and am looking forward to being part of an exciting future. I also really value your friendship.
K (x!)
On 24 March 2011, while in Hong Kong with Messrs McIndoe and Holmes, Ms Shea sent Ms Barnett an email which stated:
Subject: Am in my element!!
Haven’t been this excited about work since I left HWE five years ago. All going really well. Richard and Kevin have done a great job together and I think we would make a really great team. See you a bit later. Kx
In cross-examination, Ms Shea agreed that she was referring to Messrs McIndoe and Holmes in the email. She testified:
I was a bit carried away with the moment, … I wrote it and I felt very excited at the time, but I’ve had lots of exciting points between then and HWE … I was pleased with how things had gone in the presentation.
…
Richard is a very good presenter. There is no doubt about that. Kevin less so, but I was feeling magnanimous because I was over in Hong Kong and was pleased with the way the presentation had done.
She testified that by “I think we would make a really great team” she had meant working with, not for, Mr Holmes and that she had written the email before she found out about many of the “other incidents”.
Ms Shea acknowledged that she sent the email to Ms Barnett in circumstances where she had previously informed Ms Barnett of the Hong Kong incident which occurred the year before.
In late March, while in Hong Kong, Mr McIndoe discussed with Mr Greenwood the investor relations role and the difficulties between Ms Shea and Mr Holmes. Mr McIndoe suggested that Ms Shea should have “a dotted line” reporting to Mr Holmes. Mr Greenwood, who regarded it as a sensible outcome, stated that Ms Shea had informed him that Mr Holmes had made a pass at her in Hong Kong.
The billing issues
In April 2011, there was considerable concern within the respondent over the increasingly high level of media attention on its persistent problems in billing its customers in an accurate and timely manner.
In an email dated 20 April 2011 to Messrs Holmes, Hutchinson, Lambert, Martin, McIndoe and Purvis and Nancy Sequeira (Mr McIndoe’s executive assistant), and copied to Mr Collette, with the subject line “Increased media focus on billing errors” Ms Shea outlined a proposed approach to the respondent’s communications with the media and stakeholders about its errors in sending incorrect bills or failing to send any bills at all. Ms Shea noted that the number of requests from various media was increasing to approximately one every day. The Minister for Energy’s chief of staff was also seeking information on the extent of and proposed solutions for the problem. Ms Shea proposed a candid disclosure, including, inter alia, that about 100,000 to 150,000 customers were affected.
Later that night on 20 April 2011, Mr McIndoe emailed Nick Stone, an employee working in the Retail unit, stating:
[W]e are now about to face a real shit storm in the media owing to inaccurate and late billing. While you say “no silver bullet”, there must be something we can do.
…
We are about to get whacked really hard and really publicly. Where are the problems, who is accountable for them and how can they be fixed?
On 21 April 2011, Mr Stone sent an email to Mr McIndoe stating that he had had “a good chat with Kate”.
Later that day, Mr Stone, in an email to Mr McIndoe and Ms Shea suggested (to assist Ms Shea in drafting a media response), that only a small number of customers were affected, that numbers should not be quoted to the media, and that the size of “the issue” varied to between 0.6% and 2.3% gross.
Later again that day, Mr Markham, in an email to Mr McIndoe and Ms Shea (copied to Con Hristodoulidis, who reported to Ms Shea and to Mr Stone) advocated a frank approach, stating that “3% of our customers not billed on time is lots” and urging the respondent to “acknowledge [the] negatives”.
Later that day, Mr McIndoe emailed that he would like to “sign off” on any media release. Mr Hristodoulidis responded that he had informed a Herald Sun journalist that “[w]e estimate at this stage that up to 100K customer accounts may be affected, mostly in Victoria”. Mr Hristodoulidis anticipated that the Herald Sun would run a story the following day, when its readership was lower than usual as it was Easter.
By an email in response dated 21 April 2011, Mr McIndoe sought an explanation for the “source of the 100,000 number”. Mr Hristodoulidis responded that there was “no single source of truth”, and the number was an extrapolation, albeit queried by Mr Stone.
An article which appeared in the Herald Sun on 22 April 2011 under a headline “Nearly 100,000 Victorians hit by TRUenergy billing bungle” referred to Mr Hristodoulidis’ report that up to 100,000 of the respondent’s household and business customers nationwide were experiencing overcharging, undercharging or delays in billing.
Mr Stone of the Retail unit continued to assert that the figures included in the newspaper article were inaccurate and significantly over-stated the problem. In his email to Mr McIndoe dated 27 April 2011 (and copied to Mr Collette), Mr Stone stated, inter alia, “[o]nly a handful of customers that we are aware of have been overcharged or have had billing errors – ie not 100,000”. Mr Stone asserted that according to relevant data, only 28,510 customers, rather than the 100,000 reported, were affected by long delayed bills.
On 28 April 2011, George Company emailed various persons including Mr Hristodoulidis, attaching an advertisement of a competitor which referred to the respondent’s acknowledged billing problems. Mr Stone forwarded the advertisements to Mr McIndoe.
Ms Shea acknowledged that policy and strategy functions relating to the Energy Markets unit (the wholesale electricity market) were not part of her former role.
Ms Shea testified that the sustainability function resided in her former unit. She testified that she had undertaken some work on sustainability when she returned to work in October 2011, but conceded that she hired an external consultant to perform it.
Mr McIndoe conceded that there was some overlap between Ms Shea’s former role and that of Ms Savage in relation to sustainability strategy, but described it as modest, as the sustainability function was created after Ms Shea’s return to work in October 2011, amounted to about 10% or less of Ms Shea’s role and was undertaken by an external contractor.
Ms Shea testified and Mr McIndoe conceded that Ms Savage now oversaw the corporate affairs function, which was formerly part of Ms Shea’s business unit. Mr McIndoe testified that the change came about because Mr Kitchen, who was responsible for corporate affairs (and had previously reported to Ms Shea in the Corporate and Government Affairs unit and then to Mr Lambert in the General Counsel and Company Secretary unit) left the company at the end of 2012. The company then retained George Svigos and moved the corporate affairs function from the General Counsel and Company Secretary unit to Ms Savage’s unit to reduce Mr Lambert’s then considerable workload.
Messrs Merrick and McIndoe testified that Ms Savage had recently acquired the business development function, which was more than a minor part of her role (with approximately 15 persons in that area) and had never been part of Ms Shea’s former role.
I concluded that while there were some areas of overlap between Ms Shea’s position and the current position of Ms Savage, including, principally, in corporate affairs and sustainability, the positions were not substantially identical. Corporate strategy, government relations and policy in the wholesale electricity industry, wholesale regulation functions and reporting functions comprised substantial elements of Ms Savage’s role, but were not formerly undertaken by Ms Shea. Sustainability was not a major component of Ms Shea’s responsibilities and the function of corporate affairs was reallocated to Ms Savage following a staff change about a year after Ms Shea’s dismissal. Accordingly, the functions undertaken by Ms Savage did not support the contention that Ms Shea’s redundancy was manufactured.
Conclusion
In my opinion, assuming that (contrary to my conclusion above) the applicant made any of the alleged complaints that was a complaint that she was able to make in relation to her employment within the meaning of s 341(1)(c)(ii) of the Act, the respondent discharged the burden of proving that none of the alleged complaints (or any variant thereof) was a substantial and operative factor in, or an operative or immediate reason for, the decision to take adverse action against the applicant by making her position redundant.
The relief sought by the applicant
Given the finding that there was no contravention of the Act, it is unnecessary to consider the question of relief. Moreover, it is, in many respects, impossible to divorce a consideration of relief from the factual findings that I have made. While the consideration of relief is consequently speculative and somewhat artificial, for completeness, in broad terms only, I consider the parties’ evidence and submissions on that issue.
The applicant’s submissions
The applicant alleged that, by reason of the respondent’s contravention, she suffered loss and damage as follows:
(a)Lost opportunity to work for the Respondent up to and after November 2012 when it is anticipated the Respondent will publicly list on the Australian Stock Exchange;
(b)Lost remuneration and benefits, including shares/options, which would otherwise have been received, or were likely to be received, if her employment had continued until or after the public listing referred to in paragraph (a);
(c)Damage to reputation and career prospects; and
(d)Damage by way of distress, anxiety and disappointment.
The applicant primarily sought reinstatement to her former position under s 545(2)(c) of the Act, together with compensation for loss and damage suffered from the date of the termination of her employment (6 February 2012) until the date of her reinstatement under s 245(2)(b) of the Act.
Alternatively, the applicant sought compensation for loss and damage suffered from 6 February 2012 until the end of the proceeding, compensation for future loss and damage for a period of five years, compensation for damage to her reputation and the imposition of the maximum penalty against the respondent payable to the applicant (under sub-s 546(1) and (3)(c) of the Act). The applicant made no submissions in relation to damages for distress, anxiety and disappointment.
The calculations of the total quantum of damages claimed were set out in the amended further particulars of paragraph 21 of the statement of claim dated 26 July 2013 (“amended further particulars of loss and damage”).
The amended further particulars of loss and damage sought damages in a total sum of $962,230 if the appellant were reinstated on 7 September 2013, made up as follows:
The applicant’s calculations were set out in more detail in a spreadsheet entitled “Particulars of Loss” (the “applicant’s spreadsheet”) where:
1.“FAR” stands for “fixed annual remuneration” or salary;
2.“LTI” stands for “long-term incentive” payment;
3.“STI” stands for “short-term incentive” payment and “AIP” was the former term for “short-term incentive” payment.
The applicant’s spreadsheet provided as follows:
The applicant claimed a total net loss from 6 February 2012 to 6 September 2013 (then the projected end date of the trial) of $962,230 (which included a set-off of the termination payment of three months’ salary in lieu of notice, the redundancy payment of six months’ salary ($247,538) and took account of her mitigation ($8,523)).
The applicant submitted that if she were not reinstated, her loss would continue at the rate of $751,318 per annum (plus CPI increases) or, in the event of a public listing, $1,386,000 per annum (plus CPI increases) for five years or until she obtained suitable alternative employment. The applicant also claimed a one-off retention bonus of $308,000 if the respondent were listed.
The applicant calculated her future loss at $1,119,265 (7 September 2013 to 25 February 2015) plus $5,522,072 (25 February 2015 to 6 September 2018) (plus CPI increases) based on loss of remuneration for five years, three of which were at a rate of remuneration based on the respondent’s public listing. The calculations were as follows:
The applicant submitted that as the historical reluctance to order reinstatement of contracts involving personal service had been abrogated by s 545(2)(c) of the Act, there was no insurmountable obstacle of reinstatement in this case, particularly as Ms Shea testified that she was on good terms with two of the three directors on the respondent’s board, namely Messrs Merrick and Hutchison.
Further, the applicant submitted that unless she were reinstated, Mr McIndoe would “achieve his illegitimate and prohibited purpose”. Moreover, it could not be assumed that he would act in “spite or personal self-interest against the applicant … despite a court order, in the event she is reinstated”.
The respondent’s submissions
The respondent opposed the applicant’s reinstatement, contending that it was “entirely impracticable and unsustainable”, for the following reasons:
(a)the need for the CEO, Mr McIndoe to have complete confidence in Ms Shea;
(b) Mr McIndoe’s loss of confidence in Ms Shea;
(c)Ms Shea’s implicit concession that Mr McIndoe is no longer a person with whom she could work;
(d)Ms Shea’s attack on Mr McIndoe and other senior managers in the course of this litigation, in particular;
(i)the putting of very serious allegations to Mr McIndoe, despite the absence of any direct evidence of them being brought as part of her case;
(ii)the attack on the character of Mr Merrick in her supplementary outline of evidence;
(iii)her asserted reasons for Mr Purvis not taking any steps when she told him of the events in Hong Kong;
(e)the consequent interference with the ability of EnergyAustralia to have in place the structure its management regards as most appropriate going forward in the event of a listing on the stock exchange;
(f)the sound management justification for the decision to terminate Ms Shea’s employment …; and
(g)Ms Shea’s lack of appreciation of the seriousness of her conduct in sending the “JBF” email and other emails undermining members of the Executive Team and other senior managers at EnergyAustralia.
The respondent also submitted that there was no currently available position for the applicant within the company.
The respondent submitted that the applicant’s calculation of compensation was too high, as it included an additional increase in August 2012 and a yearly maximum short-term and long-term incentive payment, which were unwarranted. Further, the applicant’s calculation of future loss and damage was too high because it wrongly assumed that the company would be publicly listed by 2015 and assumed a period of five years’ unemployment, which was much too long.
The respondent submitted that any compensation should be calculated on the basis of the applicant’s remuneration package and adjusted to take account of any likely variations, to be assessed by reference to the remuneration for other senior executives set out in its “Direct Reports to Managing Director salary reviews conducted in conjunction with CLP” (the “respondent’s salary review document”).
The respondent’s salary review document provided:
The respondent submitted that the percentage increases used in the applicant’s spreadsheet could not be reconciled with its tables.
The respondent submitted that the Court must take into account the likelihood that Ms Shea would secure alternative employment. It relied on Mr Farrow’s opinion that Ms Shea should have found alternative employment within about twelve months of her dismissal. The respondent submitted that as the payment Ms Shea received on termination covered a twelve month period, no compensation for future loss should be awarded.
The respondent submitted, based on Mr Farrow’s evidence, that Ms Shea had failed to take reasonable steps to mitigate, and any order should be adjusted appropriately.
The respondent also claimed set-off of Ms Shea’s severance payment upon termination against any award of compensation. It noted that Ms Shea’s statutory accrued leave entitlements, which were paid out upon her termination, would not have been paid had her employment not terminated on that date.
The respondent submitted that no compensation should be awarded for damage to the applicant’s reputation and damage by way of distress, anxiety and disappointment, as there was no evidence of Ms Shea’s reputation, reputational damage or medical evidence to support such claims.
Finally, the respondent submitted that the Court should exercise its discretion and consider the manner in which Ms Shea conducted her case, including “her conduct in securing the mobile phone and arranging for the report from Mr Caldwell to be prepared, and the baseless allegations against Mr McIndoe, Mr Purvis and Mr Merrick”.
The parties agreed that submissions as to penalty should await the publication of these reasons.
The legislation
Section 545 of the Act relevantly provides:
Federal Court and Federal Circuit Court
(1)The Federal Court or the Federal Circuit Court may make any order the court considers appropriate if the court is satisfied that a person has contravened, or proposes to contravene, a civil remedy provision.
…
(2)Without limiting subsection (1), orders the Federal Court or Federal Circuit Court may make include the following:
(a)an order granting an injunction, or interim injunction, to prevent, stop or remedy the effects of a contravention;
(b)an order awarding compensation for loss that a person has suffered because of the contravention;
(c) an order for reinstatement of a person.
Section 546 of the Act relevantly provides:
(1) The Federal Court, the Federal Circuit Court or an eligible State or Territory court may, on application, order a person to pay a pecuniary penalty that the court considers is appropriate if the court is satisfied that the person has contravened a civil remedy provision.
…
Determining the amount of the penalty
(2)The pecuniary penalty must not be more than:
…
(b)if the person is a body corporate – 5 times the maximum number of penalty units referred to in the relevant item in column 4 of the table in subsection 539(2).
Payment of the penalty
(3)The court may order that the pecuniary penalty, or a part of the penalty, be paid to:
(a)the Commonwealth; or
(b)a particular organisation; or
(c)a particular person.
Section 539(2) provides that the maximum penalty for the civil penalty provision s 340(1) is 60 penalty units.
Subsection 340(1) of the Act provides that the subsection is a civil remedy provision.
Reinstatement
As stated above, the applicant primarily sought reinstatement to her former position within the respondent.
Mr McIndoe testified that he found it “inconceivable that Ms Shea could come back to a role in EnergyAustralia” in light of the two year dispute, including the events leading up to Ms Shea’s return to work in October 2011 and, in particular, the litigation.
Mr McIndoe claimed that Ms Shea’s “claims and untruths” about him personally over the past two years had had an “extremely detrimental impact” on him and a “devastating impact” on his reputation.
Mr McIndoe testified that emails sent by Ms Shea while employed at the respondent referred to in paragraphs 114 to 115, 147 and 321 to 322 would have made him concerned and angry had he been aware of them at the time. Some emails showed “a complete disrespect for other people in the organisation and an attempt to undermine their authority”. They would have resulted in a dismissal had the conduct persisted.
Mr McIndoe testified that the email to Mr Markham dated 9 March 2011 in which Ms Shea referred to former Prime Minister Gillard as “a dog” was “appalling”, and had it become public, he “would have had no option but to terminate Ms Shea”.
The applicable principles and authorities
In Quinn v Overland (2010) 199 IR 40; [2010] FCA 799 (“Quinn”) at [97]–[98], Bromberg J observed that the historical reluctance to order specific performance of employment contracts had been modified by recognition of the realities of modern employment relations. His Honour stated at [98] that under modern statutory unfair dismissal regimes:
Dismissed employees are regularly reinstated into their former employments without apparent consequent difficulties. The long-standing nature of this remedy, and its acceptance as part of the industrial furniture, is a testament to the fact that as a matter of practice, a breakdown in confidence is not necessarily irreconcilable.
It is well established that reinstatement requires an employee to be restored to his or her former position with the same terms, conditions, benefits and work as were previously enjoyed: Blackadderv Ramsey Butchering Services Pty Ltd (2005) 221 CLR 539 at [14] per McHugh J, [33] per Kirby J, [43]–[44] per Hayne J and [75] per Callinan and Heydon JJ; Australian Postal Corporation v Stephens [2011] FCA 947 at [12] per Rares J.
In Perkins v Grace Worldwide (Aust) Pty Ltd (1997) IR 186 (“Perkins”) at 191, the Full Federal Court (Wilcox, Marshall and North JJ) observed that a loss of trust and confidence, if “soundly and rationally based”, is relevant to determining whether reinstatement is appropriate.
A breakdown in confidence between an employer and employee is not necessarily fatal to reinstatement if sufficient trust and confidence for the particular employment relationship can be restored: Australian Postal Corporation v Stephens [2011] FCA 947 at [13] per Rares J; Quinn at [97]–[98] per Bromberg J; Perkins at 191 per Wilcox CJ, Marshall and North JJ.
In National Tertiary Education Union v Royal Melbourne Institute of Technology [2013] FCA 451, Gray J ordered the respondent, RMIT, to reinstate the applicant, Professor Bessant, to her former academic position under s 545(2)(c) of the Act. His Honour found that RMIT had used its redundancy processes to rid itself of Professor Bessant, who was considered “troublesome”, in part at least because she exercised her workplace rights by making complaints about the behaviour of her immediate supervisor, Professor Hayward (at [141]).
Gray J observed that despite some difficulty in reinstating Professor Bessant, trust and confidence were not incapable of restoration. Professor Bessant’s performance was not criticised and her ultimate superior could still talk with her, although her relationship with her supervisor was unsustainable.
Gray J stated at [150]:
As I see the situation, it is necessary to choose between putting Professor Bessant back into a situation in which, if she should have dealings with Professor Hayward, those dealings are likely to be unworkable, and forcing RMIT to pay out a very large sum of money to compensate Professor Bessant for the likely consequences of her dismissal. In the circumstances, it seems to me that the first of these courses is the preferable one. Ordering that Professor Bessant be reinstated to the position she held immediately prior to her dismissal taking effect would mean that she would return to her research position in a building in which she was separated from Professor Hayward’s physical presence, and in which she would be insulated from any direct reporting to Professor Hayward by being able to report to Professor Siracusa. She would be able to engage in productive research, which would benefit both her and RMIT. Assuming that she were to remain in employment at RMIT for the next decade, the money spent by RMIT in employing her would be money that would produce a benefit to RMIT, in having Professor Bessant’s services, rather than money simply paid out to compensate her. Reinstatement appears to me to offer a more positive outcome for Professor Bessant and RMIT. If Professor Bessant decides to seek employment elsewhere, at least she will have the benefit of doing so while she is holding the position of a professor at RMIT, rather than being unemployed after dismissal.
Consideration
In my opinion, the trust and confidence necessary to the employment relationship between Ms Shea and the respondent has broken down and could not be sufficiently restored to permit her reinstatement.
Reinstatement would require the applicant to work in a comparable position to a member of the executive team, which would require her to work closely with the managing director, Mr McIndoe (who considered her return “inconceivable”) and other members of the executive team, including Mr Merrick.
This is not a case where, as in Perkins, an employer has accused an employee of misconduct which has not been upheld at trial. Rather, on my findings, the applicant has made many allegations of grave personal misconduct against the managing director and other members of the executive team, and staff namely Messrs Holmes, Purvis and Merrick and Ms Robertson. The applicant also alleged that the respondent’s culture was lewd, that it condoned serious sexual improprieties and that a number of its most senior executives colluded to subvert an investigation of her allegations. The allegations exposed the private concerns of a number of other employees or former employees. While Messrs Holmes and Purvis have left the respondent, the applicant’s accusations which, on the basis of evidence at trial, were not substantiated, would, in my view, render unsustainable her return to the workplace as a person in whom trust and confidence could be reposed. That conclusion is fortified by the evidence of a number of emails sent by Ms Shea, at least one of which, Mr McIndoe plausibly testified would have necessitated her dismissal had it become public.
I was also persuaded that Mr McIndoe justifiably lost a degree of confidence in Ms Shea as a result of her approach to her day spent in Sydney on 14 December 2011, which was not transparent, and due to the revelation that she was unknown to the shadow minister in a portfolio highly relevant to her job. Moreover, on the evidence, there is currently no appropriate comparable position available for Ms Shea.
Accordingly, in my view, reinstatement would be inappropriate.
Compensation for loss and damage
Ms Shea was unable to explain many of the calculations in the spreadsheet which Mr Carden principally prepared with her assistance.
Both parties relied on respondent’s salary review document, (extracted above at paragraph 838) but reached different conclusions.
The respondent’s salary review document set out the total fixed annual remuneration increase in dollars and in percentage for each of Mr McIndoe’s seven “direct reports” in 2012 and 2013. It stated that the “Average Salary Increase” was, in 2012, 4.24% and, in 2013, 3.64% (although the 2013 increases were yet to be finalised and approved). It did not state whether the average was for increases for the executives listed in the table or the entire company.
The fixed annual remuneration
The applicant’s spreadsheet set out her fixed annual remuneration for the period from 1 January 2011 to 6 September 2013 and the annual remuneration forgone. It concluded that Ms Shea’s total fixed annual remuneration forgone from the date of termination until the then-projected conclusion of the trial was $615,260.
Ms Shea initially testified that salary reviews occurred twice yearly but ultimately agreed that there was an annual pay increase, sometimes with other pay increases made on an ad hoc basis.
Mr McIndoe testified that increases in fixed annual remuneration occurred in April of each year for the succeeding 12 month period.
In her spreadsheet, Ms Shea allocated a 17% increase in 2012 (made up of two fixed annual remuneration increases) although the average increase shown in the respondent’s salary review document was only about 4%. She did not recall how she had arrived at the 17% figure.
Ms Shea allocated herself a 10% increase in 2013, while the average increase shown in the respondent’s salary review document was only 3.6%. She could not explain how she arrived at the figure, stating that it was an issue of “recollection” as opposed to “comprehension”.
In my opinion, the evidence did not establish a 17% average salary increase for 2012 or a 10% average salary increase for 2013 for executives comparable to Ms Shea. Any compensation for lost remuneration for those years should be calculated on the basis of the average increase for executives. While the averages shown in the respondent’s document are 4.24% and 3.64%, the more accurate calculation of averages for executives appears to be 7.2% and 8.8% respectively.
The short-term incentive payment
The applicant included a 35% short-term bonus (“AIP/STI”) for a calendar year based on her fixed annual remuneration arrived at on 1 April of that calendar year, adjusted for “the award that was given to [Ms Shea] for her own individual effort”.
Mr Carden calculated Ms Shea’s individual bonuses for the year in the first column of the table (1A) at 120%, as that was the amount she received upon termination. The applicant used the figure of 126% to calculate her projected short-term incentive payment, as the average of all the bonus payments she had received while at the company.
Mr McIndoe testified that annual bonuses were not paid at the increased rate of fixed annual remuneration but were paid in April and fixed in the previous month (and referable to the rate of fixed annual remuneration prior to any increase on 1 April). Mr McIndoe’s evidence was consistent with the terms of the respondent’s annual incentive plans, which were in evidence.
Mr McIndoe agreed that the short-term incentive for each of the executives in 2012 and 2013 was 35%.
Accordingly, 35% is an appropriate rate for the applicant’s short term incentive bonus for the years 2012 and 2013, which would be paid in April but calculated using the previous rate of the fixed annual remuneration.
The long-term incentive payment
The applicant claimed a long-term incentive payment (“LTI”) of 25%.
Mr Carden testified that he calculated the long term incentive figure based on a long-term incentive rate of 25% and a short term incentive rate of 120-126% and then multiplied 25% of the fixed annual remuneration by 120-126%.
He assumed, in the absence of any indication to the contrary, that short term and long term incentive payments were calculated in the same way.
The respondent tendered the company’s confidential “Rules of the 2012 EnergyAustralia Long-Term Incentive Plan” dated 8 October 2012 (and approved on 18 October 2012) and the “EnergyAustralia Long Term Incentive Plan for Group Executive Managers” dated March 2013 (and approved on 28 March 2013). Mr McIndoe agreed that the long-term incentive for each of the executives in 2012 and 2013 was 25%. Accordingly, I accept that a long term incentive payment of 25% would be appropriate for the years 2012 and 2013.
Compensation for future loss and damage for lost remuneration
The amounts claimed under this heading are set out at paragraph 831 above.
Compensation in the event of a public listing
The applicant calculated the sums applicable upon a public listing based on Mr Patullo’s expert reports dated 14 December 2012 and 28 May 2013 and his outline of evidence dated 27 June 2013.
The applicant submitted that the public listing of the respondent, originally scheduled for November 2012, was now scheduled for February 2015 at the latest.
In my opinion, as the respondent submitted, Mr Patullo’s evidence was of limited relevance as it was based on the assumption of the respondent’s public listing and a considerably higher net worth than the evidence established. Mr McIndoe testified that that he could not envisage a public listing taking place “in the near future [and] certainly not before 2015 or beyond”. The respondent submitted that the prospect of Ms Shea continuing her employment up to and beyond the public listing would be “so low as to be regarded as speculative” in reliance on Guthrie v News Limited (2010) 27 VR 196 at [167]-[168] and Lennon v State of South Australia [2010] SASC 272 at [689] per Layton J.
The respondent also submitted that it was unlikely that Ms Shea would have obtained the investor relations role and resultant greater remuneration, as the role was only necessary in the event of a public listing.
In my opinion, the evidence did not establish that the public listing of the respondent would probably occur by February 2015. Nor could it be assumed that the applicant would have remained in her position until a public listing with the consequent increase in remuneration or that she would have received higher remuneration for investor relations work. Accordingly, any compensation for future loss for lost remuneration should be calculated without reference to those circumstances.
Period of compensation for future loss and damage
The applicant contended that five years was “a reasonable and modest estimate of the likely time it would take her to obtain similar employment. In my opinion, five years is an unduly long period for the applicant, if taking appropriate steps, to remain without similar employment. On the other hand, taking into account the relatively limited number of similar positions and the impact of the proceeding, one year seemed unrealistic, even if the applicant had taken the steps advocated by Mr Farrow. Accordingly, in my view, a period in the order of two years would be appropriate.
Set-off
The respondent submitted, and I accept, that it would be entitled to set-off the payment to Ms Shea on termination of her employment of $455,549.58, which included:
(a) her salary ($1,154.01) and bonus payment ($134,448.00);
(b) her statutory leave entitlements ($69,347.74); and
(c)three months’ pay in lieu of notice ($82,512.50) and six months’ redundancy pay ($165,025.00), the total of which was $247,537.50 (Severance Payment).
The respondent noted that Ms Shea was paid her statutory accrued leave entitlements only because her employment was terminated, so the payment should be off-set against any award of compensation made by the Court. The respondent relied on Quinn v Jack Chia (Australia) Ltd [1992] 1 VR 567 at [40] and Macauslane v Fisher and Paykel Finance Pty Ltd [2003] 1 Qd R 503 at [31] (“Macauslane”), which indicate that where an employee has not received the required notice prior to termination, accrued leave entitlements will be included in the damages rather than a separate, additional, entitlement and, accordingly, any lump sum payment for accrued leave made upon termination would be set-off against the award of damages. Holmes J (with whom McMurdo P and White J agreed) observed that leave entitlements in that case “should not be regarded as constituting an additional benefit lost” because the employer “would have been within its rights to require the [employee] to exhaust his leave entitlements as part of the [requisite] period of notice” (Macauslane at [31]).
Whether accrued leave would to be incorporated within the period of time for which compensatory damages were awarded to Ms Shea (if any such damages were awarded) would depend upon the contractual arrangements between Ms Shea and the respondent and other matters not in evidence.
Mitigation
The respondent submitted that Ms Shea had failed to take reasonable steps to mitigate, as she had not approached the major recruitment agencies, or (save for Santos) the top ASX 100 companies. It submitted that Ms Shea was waiting for the litigation to end before finding alternative employment.
Ms Shea testified that she has made “enormous effort to find a job”. Her document entitled the “Applicant’s efforts to find employment” stated:
I have made every effort to restore my earnings level through a range of activities including:
•meeting with recruitment agents and others in my network
•checking the advertisements in Friday’s Australian Financial Review
•establishing a business and seeking work advising the corporate sector in Melbourne, Sydney and Brisbane.
The document set out in a table the meetings and work she had undertaken.
Ms Shea testified that the document set out all her efforts to find employment since 6 February 2012. She testified that she established her own consulting company, Avvisi Proprietary Limited, dealing with corporate affairs and government relations soon after her employment was terminated. Ms Shea stated that she chose consultancy work because she was “concerned about the impact of this legal action on [her] career and [she] wanted to have as [sic] many options to find other employment”.
The applicant’s consultancy business rendered total invoices of only about $8,000. While that sum apparently represented about two to three days’ work, she explained that it was also necessary to quote for projects and to underestimate the time required, in order to obtain the work and prove her worth.
In cross-examination, Ms Shea conceded that “largely” all her direct contact with corporations, as listed in the table, related to her consultancy business and that 90% of the table related to consultancy work.
Ms Shea testified that she had made direct approaches to 17 mining companies which were not top 100 companies largely for consultancy work, with the view to obtaining employment. She stated that she was advised to do consultancy work and mitigate her losses in the interim because it would be difficult for her to obtain employment until the litigation was over. Ms Shea testified that she was approached by a head-hunter in relation to a role at Santos in South Australia, but the company took the negotiations no further after her case received publicity. Accordingly, Ms Shea approached very few large corporations and had only made one direct approach to an ASX top 100 or 150 company (namely Bluescope).
Ms Shea did not take up the respondent’s offer of assistance in finding employment from Mr Farrow’s firm, Heidrick & Struggles. She testified that she did not believe it would act in her best interests, as it had placed the respondent’s board and Mr Holmes, and Mr Farrow was a close associate of Mr McIndoe.
In his expert report dated 3 April 2013, Mr Farrow opined:
On average, our executive search process takes approximately 90 days to complete from start to finish.
If Ms Shea had registered her interest with the five major global executive search firms and with any relevant boutique firms, she should have been actively engaged as a highly considered candidate with regards to several comparable employment opportunities within 3-6 months.
Allowing 90 days to conclude a search process and considering the time between the acceptance of an offer and commencing employment, this should have resulted in an appointment within 12 months.
Mr Farrow stated that he would expect someone in Ms Shea’s position to take the following steps to secure comparable employment:
1.Contact each of the 5 major Executive search firms in Australia – including, but not limited to Heidrick & Struggles, Korn Ferry, Spencer Stuart, Egon Zehnder and Russell Reynolds, and register Ms Shea’s candidacy as an active job seeker.
2.Contact local and/ or specialist boutique search firms, dictated by geographic presence (eg Cordner King in Melbourne) or industry function and formally submit an application as an active job seeker.
3.Map out companies and target specific organisations Ms Shea would be interested working for and then identify key people within these organisations. Demonstrate genuine interest and personally make contact with the relevant people within these organisations (via phone, email or letter), seeking out potential job vacancies and building her own brand.
4.Utilise any outsourcing services provided by EnergyAustralia to help position herself in the market and tailor her CV accordingly.
5.Make use of any resources Ms Shea’s former employer’s offer, for example reaching out to former colleagues at John Connolly & Partners (Public & Corporate Affairs Consultancy) and/ or Orica.
6.Build an online profile via tools such as LinkedIn to help build Ms Shea’s professional network, ensuring her profile is up to date and accurate.
Mr Farrow thought that litigation had its principal impact on a participant’s employability during the hearing of the case and would be less important during the 18 months to two years leading up to the trial.
Many of the measures identified by Mr Farrow were reasonable and readily achievable steps which Ms Shea failed to take. Moreover, rather than actively seeking alternative employment, she focussed on setting up her own home‑based consultancy business, which earned only about $8,000. While the pendency of the litigation was, in my view, a greater impediment than Mr Farrow allowed, I was not persuaded that the consultancy endeavour was equivalent to a committed search for alternative employment.
Accordingly, any order for compensation should be adjusted in order to reflect Ms Shea’s failure properly to mitigate her loss.
Conclusion
In my opinion, the application should be dismissed.
I certify that the preceding nine hundred and eight (908) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dodds-Streeton. Associate:
Dated: 25 March 2014
ANNEXURE A
- AGLC
- Shea v TRUenergy Services Pty Ltd (No 6) [2014] FCA 271
- Case
- [2014] FCA 271
- Decision Date
CaseChat Overview and Summary
In evaluating the evidence, the court noted that the expert witness, Mr Farrow, had not disclosed certain details that could have impacted his independence, such as his past work for the respondent and the fact that he prepared his reports without charge. While his evidence was helpful, the omissions affected his credibility and the weight of his testimony. The court concluded that the roles held by Ms Shea and her successor, Ms Savage, were not substantially identical, which undermined the argument that Ms Shea's redundancy was manufactured. Furthermore, the court found that TRUenergy Services Pty Ltd had adequately demonstrated that Ms Shea’s termination was not influenced by her alleged protected disclosures but was a genuine redundancy arising from operational changes.
Given these findings, the court did not find any contravention of the Fair Work Act 2009 by TRUenergy Services Pty Ltd. Consequently, the application for relief by Ms Shea was dismissed as it was predicated on the assumption of a contravention that the court did not uphold. The court did not delve deeply into the specifics of potential relief since no contravention was found, thus rendering the discussion of relief largely speculative.
Orders
Orders of the court
Full text does not contain this section.
Background
Background to the litigation
Evidence
Evidence Before The Court
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Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
Ms Shea’s contract, made on 8 December 2006, relevantly provided: 6. RemunerationYour Fixed Annual Remuneration (FAR) is set out in the attached Schedule. You acknowledge that your remuneration generally is paid to you in satisfaction of any entitlement to allowances, overtime payments or other penalty rates that you may have arising from any industrial instrument that may be applicable to you.The Base Salary component of your Fixed Annual Remuneration will be payable in arrears.Fixed Annual Remuneration is reviewed annually in accordance with Company policy. Any increases in your Fixed Annual Remuneration (FAR) will be primarily dependent on your overall performance in the opinion of the Managing Director and/or relevant Manager in fulfilling role requirements and performance objectives. Adjustments will also take into consideration relevant salary market movement, organisational effectiveness and capacity to pay.…8. RewardYou will be eligible to be considered for and participate in the Company’s Annual Incentive Plan (AIP) in accordance with Company Policy at the nominated target % detailed in the attached Schedule. Incentives are pro rated from date of eligibility/entry during a Plan cycle and targets are set in consultation with you and your manager at the start of a Plan year. The Annual Incentive Plan – 2007 (excluding Retail), scheduled to Ms Shea’s contract, provided that her incentive plan would be determined when the respondent’s financial results were released and approved. The amount was calculated, usually in April, on the basis of Ms Shea’s fixed annual remuneration as at 31 December and was referable to the preceding plan year of 1 January to 31 December. A pro rata adjustment would be made if Ms Shea’s target value changed during a plan year. On or about 1 April 2007, Mr McIndoe wrote to Ms Shea confirming that her current level of remuneration and all other terms of employment would remain unchanged. He confirmed her total annual reward of $312,686. The letter attached a remuneration statement that set out Ms Shea’s remuneration, effective on 1 April 2007, as an annual base salary of $250,000 and employer superannuation contribution of $12,686 (totalling a fixed annual remuneration of $262,686) and an annual incentive plan, at a target of 20% of base salary, of $50,000. On or about 1 April 2008, Mr McIndoe confirmed that Ms Shea’s 2007 annual incentive payment (referable to the calendar year 1 January to 31 December 2007) would total $75,000 to be paid on 15 April 2008. The letter also provided details of the annual incentive plan for 2008, increased Ms Shea’s annual incentive plan entitlement at target to 25% effective on 1 April 2008 and confirmed that her fixed annual remuneration would increase to $275,000 per annum effective on 1 April 2008. The letter enclosed a total annual reward schedule, which set out Ms Shea’s remuneration effective on 1 April 2008 as an annual base salary of $275,000 and employer superannuation contribution (at 10%) of $25,000 (a total fixed annual remuneration of $275,000) and an annual incentive plan, at a target 25% of base salary, of $62,500, giving Ms Shea a total annual reward (fixed annual remuneration plus her annual incentive plan at target) of $337,500.