Sherry v Toyota Motor Corporation Australia Limited

[2020] NSWDC 827

District Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Sherry v Toyota Motor Corporation Australia Limited [2020] NSWDC 827

Hearing dates:

26, 27, 28 February 2020; 23 March 2020, 11, 12, 15 May 2020

Date of orders:

23 December 2020 and 2 February 2021

Decision date:

23 December 2020

Jurisdiction:

Civil

Before:

Scotting DCJ

Decision:

(1)   Verdict for the plaintiff in the sum of $276,681.00.

(2)   The defendant is to pay the plaintiff’s costs of the proceedings on the ordinary basis up to and including 23 July 2019 and thereafter on the indemnity basis, as agreed or assessed.

(3)   Exhibits to be returned.

Catchwords:

CONTRACTS – Termination – Intermediate term – Breach of contract – Consequences of breach – Repudiation – Damages

EMPLOYMENT AND INDUSTRIAL LAW – Contract – Summary termination – Serious misconduct

Legislation Cited:

Civil Procedure Act 2005

Evidence Act 1995

Cases Cited:

Adami v Maison de Luxe Ltd (1924) 35 CLR 143

Associated Newspapers Ltd v Bancks (1951) 83 CLR 322

Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435

Banque Commerciale SA (En liq) v Ankil Holdings Ltd (1990) 169 CLR 279

Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66

Briginshaw v Briginshaw (1938) 60 CLR 336

Bunge SA v Nidera BV [2015] UKSC 43

Camden v McKenzie [2008] 1 Qd R 39

Cockburn v Alexander (1848) 6 CB 791

Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389

Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64

Condren v Southport Workers Community Club Inc [2010] QSC 130

Coope v LCM Litigation Fund Pty Ltd (2016) 333 ALR 524

Esanda Finance Corp Ltd v Plessnig (1989) 166 CLR 131

Galafassi v Kelly (2014) 87 NSWLR 119 at 135

Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1

Geys v Société Générale London Branch [2013] 1 AC 523

Golden Strait Corp v Nippon Yusen Kubishika Kaisha (The Golden Victory) [2007] AC 353

Jones v Dunkel (1959) 101 CLR 298

Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115

Lavarack v Woods of Colchester Ltd [1967] 1 QB 278

Lithgow City Council v Jackson (2011) 244 CLR 352

Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd (1938) 61 CLR 286

Maredelanto Compania Naviera SA v Bergau-Handel GmbH (The Mihalis Angelos) [1971] 1 QB 164

McGraddie v McGraddie [2013] 1 WLR 2477

Melbourne Stadiums Ltd v Sautner (2015) 229 FCR 221

Melbourne Stadiums v Sautner (2015) 254 IR 1

Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 67 ALJR 170

New South Wales v Hunt (2014) 86 NSWLR 226

Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444

Palmer v Dolman [2005] NSWCA 361

Pharm-a-Care Laboratories Pty Ltd v Commonwealth of Australia (No 3) (2010) 267 ALR 494

Polar Aviation Pty Ltd v Civil Aviation Safety Authority (No 4) [2011] FCA 1126

Purkess v Crittenden (1965) 114 CLR 164

Rankin v Marine Power International Pty Ltd (2001) 107 IR 117

Re B (Children) (Remote Hearing: Interim Care Order) [2020] EWCA 584

Sargent v ASL Developments Ltd (1974) 131 CLR 634

Seventi v John Holland Group Pty Ltd [2006] FCA 1049

Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359

Smith v Butler [1900] 1 QB 694

Spiliotopoulos v National Australia Bank Ltd [2017] NSWSC 971

Tasman Capital Pty Ltd v Sinclair (2008) 75 NSWLR 1

Tasman Capital Pty Ltd v Sinclair (2008) 75 NSWLR 1

TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 10

Three Rivers District Council v Bank of England (No 3) [2003] 2 AC 1

Tramways Advertising Pty Ltd v Luna Park(NSW) Ltd (1938) 38 SR (NSW) 632

Watson v Foxman (1995) 49 NSWLR 315

Category:

Principal judgment

Parties:

Gregory Vincent Sherry (Plaintiff)
Toyota Motor Corporation Australia Limited (Defendant)

Representation:

Counsel: J Phillips SC (Plaintiff)
M Seck (Defendant)

Solicitors: Vector Legal (Plaintiff)
Minter Ellison (Defendant)

File Number(s):

2018/385621

Publication restriction:

None

Judgment

Introduction

1. Gregory Vincent Sherry (the plaintiff) sues for damages for repudiation of the employment contract between himself and the Toyota Motor Corporation Australia Limited (TMCA).

2. The plaintiff was employed by TMCA pursuant to a written contract dated 1 July 2013 (the employment contract).

3. In the course of correspondence in the period 3 December 2015 to 20 June 2017, TMCA represented to the plaintiff that if he continued to work for TMCA until 31 March 2018 that he would be entitled to a redundancy payment in the sum of $379.268.10 gross ($290,359.10 net).

4. On 28 March 2018, the second last working day before 31 March 2018, [1] TMCA purported to terminate the plaintiff’s employment effective immediately for serious misconduct. TMCA alleged that the plaintiff had dishonestly and in breach of the relevant policies, incurred personal expenses on his corporate credit card in the sum of $1,754.50 predominantly relating to a business trip to Melbourne in January 2018.  On the day he was terminated the plaintiff was informed he would be paid a termination payment in the sum of $80,521.90 gross ($49,621.40 net). 

   1. 29 March 2018 was Easter Thursday and 31 March 2018 fell on Easter Saturday.

5. It was common ground that if TMCA did not have grounds for the immediate termination of the plaintiff that its purported termination was a repudiation of the contract, which would entitle the plaintiff to damages.

6. The issues in the case are:

1. Was TMCA entitled to terminate the plaintiff’s employment for the serious misconduct set out in [85] below?

2. If not, what is the appropriate amount of damages to be awarded to the plaintiff?

Evidence

7. The plaintiff relied on the following affidavits:

1. Affidavits of Gregory Sherry affirmed 14 June 2019 and 18 September 2019; and

2. Affidavit of Robert Kevin Langridge affirmed 25 September 2019.

8. TMCA relied on the following affidavits:

1. Affidavit of Nicolina McCarthy affirmed 8 August 2019;

2. Affidavits of Geraldine Buchanan affirmed 9 August 2019 and 24 February 2020;

3. Affidavit of Steve Findlay affirmed 19 August 2019; and

4. Affidavit of Rachel Eather affirmed 9 August 2019.

9. Each of the deponents was called to give evidence and cross-examined.

10. The determination of the case turns significantly on the credit and veracity of the witnesses called. As a result of the COVID-19 pandemic, TMCA’s witnesses were called to give evidence by audio-visual link (AVL) because they were all residents of Victoria. During the trial I was conscious that “the dynamics and demands of the remote process [did] not impinge upon fundamental principles”, including procedural fairness: Re B (Children) (Remote Hearing: Interim Care Order) [2020] EWCA 584 at [4]. I am satisfied that I was able to properly assess the credit of the relevant witnesses. For the reasons set out below, I am satisfied that my findings based on demeanour follow my findings based on the objective evidence.

Factual Background

11. The following chronological account of the facts was not in dispute and I make factual findings in accordance with the matters set out at [12] to [74].

12. The plaintiff was first employed by TMCA in or about April 1997 as the Service Manager at Sydney City Toyota.

13. In July 2004 the plaintiff was promoted to the Gulf Co-operative Council Service and Parts Manager based in Bahrain. In this role the plaintiff was responsible for all service and parts related matters for vehicles exported by Toyota to the Middle East. He was employed by a different Toyota company and relocated with his family to Bahrain.

14. In 2007 the plaintiff returned to Australia and was employed by the defendant as the Sales and Operations Manager for the Eastern region, based in Caringbah. In this role the plaintiff supervised four zone managers who were responsible for Toyota’s service operations in New South Wales.

15. In early 2008 the plaintiff was employed in the role of National Aftersales Field Operations Manager. In that role the plaintiff oversaw the regional Aftersales staff in Australia, including the responsibility for training dealership and supplier employees in the “Toyota Way Training”, which covered Toyota’s history, practices and principles.

16. In 2009 the plaintiff was tasked with conducting a complete review of service management standards with a view to improving those standards. The plaintiff was assigned three staff members to assist him with the review which was completed over 12 months.

17. In February 2010 the plaintiff was appointed as the National Service Advisor Trainer and attended a training course in Japan. After that time the plaintiff was the only person in Australia with that qualification.

18. In July 2013 the plaintiff was promoted to the role of Service Management Training Manager, a role he held until his termination. On 12 September 2013 the plaintiff signed a written offer of employment for this position that was dated 1 July 2013 (the written contract).

19. The relevant terms of the written contract are set out as follows:

Duties and Obligations

You will be required to perform duties and undertake responsibilities as directed by TMCA from time to time. These duties may be in addition to or as variations of the duties and responsibilities of your position. In the event of a change of duties, the terms and conditions of this offer of employment will remain in force and continue to apply to your employment unless otherwise agreed in writing.

You agree that you will:

(a)   faithfully and diligently serve TMCA exercising all due care and act at all times in TMCA’s best interests;

(b)   refrain from acting or being seen to act, in conflict with TMCA’s best interests;

(c)   at all times display a thorough and professional manner, upholding and maintaining TMCA’s reputation, goodwill and its customer relationships; and

(d)   at all times comply with TMCA’s policies and procedures, including its ‘HR Policies and Guidelines’, and other directions and requirements of TMCA inclusion those relating to expected behaviour in the workplace.

Policies and Guidelines

You are required to comply with all of TMCA’s policies and procedures, including its ‘HR Policies and Guidelines’, (which can be found on the TMCA intranet as introduced and/or amended by TMCA from time to time. Whilst applying to you, the policies and guidelines are not incorporated into this contract and do not create enforceable contractual rights for you.

Breaches of TMCA’s policies and procedures, including its HR Policies and Guidelines, may result in disciplinary action up to and including potential termination of your employment. For specific details relating to the terms and conditions of your employment with TMCA please refer to the policies in ‘Terms and Conditions – Working Hours and Terms and Conditions – Benefits’.

Termination of Employment [2]

Either you or TMCA may terminate your employment by providing the other party one month’s notice in writing, or the period of notice required by applicable legislation, whichever is the greater.

If notice is given by either party, TMCA may elect to require you to continue to work for part or the whole of that notice period or may, in its absolute discretion, make a payment in lieu of notice of the un-worked period of the notice period. Payment in lieu of notice will be made based on the total cash component. An employee who fails to work the full notice period when required by TMCA shall forfeit payment equivalent to the period of notice not worked.

If you owe any money to TMCA at the cession of your employment (howsoever occurring), you agree that those sums may be deducted from any payments otherwise due to you.

Summary Dismissal [3]

Notwithstanding any other clause in this letter of appointment, TMCA reserves the right to terminate your employment summarily and without notice for serious misconduct. Serious misconduct includes, but is not limited to:

(l)   refusal or neglect to perform your duties or to comply with any reasonable direction;

(m)   inadequate or incompetent work performance;

(n)   any act of dishonesty including theft;

(o)   assault or other violent behaviour;

(p)   breach of TMCA’s policies and procedures including in relation to occupational health and safety, e-mail use and internet access, drugs and alcohol and equal opportunity and sexual harassment.

Redundancy [4]

In the event that your position becomes redundant and, in the absence of TMCA being able to offer you a suitable alternative position, TMCA will provide redundancy payments in accordance with applicable industrial legislation and may at its discretion make such further appropriate arrangements commensurate with TMCA’s usual practice applicable to positions of equivalent seniority within the Company. Redundancy will not arise where a suitable alternative position is offered to you in the same state.

Recovery of Monies

If you are overpaid any salary or other monies by TMCA (whether by mistake or otherwise) you may be required to repay the amount overpaid in full to TMCA after being advised of the overpayment in writing. If you fail to repay the money within the time requested by TMCA, you authorise the TMCA to make appropriate deductions from your next pay or over a reasonably agreed number of pay periods until the amount is repaid in full. If your employment is terminated before the amount is repaid in full or you otherwise owe TMCA money, you authorise TMCA to deduct the outstanding overpayment or amount owed from your final payment. This clause continues to operate after cessation of employment.

2. The notice clause

3. The summary dismissal clause.

4. The redundancy clause.

20. In that role, the plaintiff was a Level 4 Manager and was based in Caringbah. The plaintiff reported to Bruce Chellingworth (Level 3), who reported to Scott Irwin (Level 2) and they both reported to Robert Langridge (Level 1). Each of the plaintiff’s managers were based in Sydney.

21. The plaintiff was responsible for delivering training to service advisors throughout Australia and was required to travel within Australia to do so. This necessitated the incurring of travel, accommodation and sustenance expenses, which were paid for by the plaintiff using a corporate credit card that had been issued to him. TMCA had in place written policies relating to travel for business purposes, booking accommodation and the incurring of expenses on the corporate credit card, which I will return to in more detail later.

22. In or about late 2014, TMCA’s parent company decided to restructure its business. In so doing it decided to relocate TMCA’s corporate functions conducted in Sydney to its company headquarters in Port Melbourne and to reduce the size of its workforce from 3,900 to about 1,300. It planned to make the necessary changes in late 2017 and to advise its employees by the end of 2015 if they had a role that was to be relocated interstate or at all beyond 2017. TMCA wrote to the plaintiff advising him of these changes on 3 December 2014.

23. In 2015 the plaintiff had discussions with his wife and decided not to relocate to Melbourne because they had two young children. The plaintiff advised Mr Chellingworth of his decision and Mr Chellingworth told him that Human Resources would contact him to discuss a redundancy package.

24. On or about 2 November 2015 the plaintiff was advised in writing by TMCA that he would be considered for redeployment in Sydney, but if no such opportunities were available that he would be eligible for redundancy benefits.

25. On or about 18 April 2017 the plaintiff was advised in writing by TMCA that TMCA did not have a role for him beyond 22 December 2017 (the End Date) and that an estimate of his redundancy entitlement would be issued in or around July 2017.

26. On or about 19 April 2017 the plaintiff was telephoned by Geraldine Buchanan, a Level 2 Manager in Melbourne. Ms Buchanan asked the plaintiff to stay on after December 2017 because no successor for his position had been identified. The plaintiff agreed to do so.

27. On or about 20 June 2017 the plaintiff was advised in writing by TMCA that the End Date was to be varied until 31 March 2018 to allow for the transfer of knowledge from the plaintiff to his successor.

28. On or about 13 July 2017 the plaintiff received a further letter from TMCA enclosing an estimate of the redundancy benefits that he would be entitled to if he remained in employment until the End Date of 31 March 2018. The estimate specified a termination payment of $379,268.10 gross ($290,359.10 nett).

29. From about mid 2017 onwards the plaintiff’s need to travel increased because he was required to travel to Melbourne to meet with his successor and other managers in Melbourne. From this time on the plaintiff was very busy trying to undertake his role, training his successor and dealing with the upheaval caused by the closing of the Sydney office and the departure of most of the people working in it.

30. The plaintiff was issued with a corporate credit card to pay for business related expenses incurred by him in the course of his employment. It was also used to pay for travel and sustenance costs when he was required to travel for work.

31. On or about 24 September 2017 the plaintiff used his corporate credit card to pay Telstra the sum of $180 in prepayment for internet usage charges incurred on a Telstra Dongle, which was a device that could be plugged into his laptop to access the internet.

32. From about November 2017 the plaintiff was required to report to Steve Findlay, a Level 3 Manager in Melbourne. Mr Chellingworth remained in the Caringbah office until his position was made redundant in December 2017, but he was no longer responsible for supervising the plaintiff. The positions of Mr Irwin and Mr Langridge were also made redundant in December 2017.

33. Mr Findlay reported to Ms Buchanan (Level 2), who reported to Jack Hobbs (Level 1). Each of these Managers worked from TMCA’s Port Melbourne office.

34. The plaintiff was required by Mr Findlay to be at TMCA’s headquarters in Port Melbourne for meetings with his successor and others in the week Monday 15 January 2018 to Friday 19 January 2018.

35. Travel bookings were made through a computerised system known as “Serko”. The system allowed TMCA employees to make bookings for air travel, car hire and accommodation for work related travel. An email containing the details of any booking made by the employee was automatically generated by the system and sent to the employee’s nominated Manager for approval (a travel request). The Manager was then required to electronically approve the travel request. If the travel request was approved, the bookings on it were then made by the system with the service provider, i.e. the airline or the hotel. The system prompted employees to choose cheaper travel options by informing them of cheaper alternatives to the fares or rates that they had selected. The approval email sent to the employee’s Manager also contained these system generated alternatives and their relative costs. If the travel request was not approved by the Manager by midnight on the day on which it was made, the bookings made in it would be automatically cancelled and the employee would be required to repeat the process.

36. When searching for accommodation, the evidence was that the system required an employee to input the dates and location of the accommodation sought. The system would then display a range of options that the employee could choose from which included the cost of the room booked on a nightly basis. No evidence was led by TMCA as to how the system was configured other than the anecdotal evidence of the witnesses as to how it worked.

37. During the course of the business trip, employees who had been issued with a corporate credit card would use it to pay for the services that had been the subject of the Serko travel request, such as car hire and accommodation as well as incidental expenses such as meals.

38. Within one month of issue of a corporate credit card statement, employees were required to submit their expenses through a system known as “Concur” to their Manager for approval. The Concur system was introduced in or about the beginning of 2017. The plaintiff was regularly behind in submitting his expenses for approval.

20. On 28 November 2017 Mr Langridge sent an email to the plaintiff requiring him to attend to the submission of his expense reports through the Concur system. At that time, the plaintiff had outstanding expenses of $10,715.70.

The first travel request

40. On 11 January 2018, the plaintiff booked a return airfare to Melbourne departing Sydney on Sunday 14 January 2018 and returning Saturday 20 January 2018, a rental car and a room at the Crown Metropol Hotel in Southbank (the Crown) through the Serko system (the first travel request). An email was sent by American Express Global Business Travel (the travel agent) to Mr Findlay. The email described that the room at the Crown including the words “Urban Luxe 42 Sqm” and specified that the total cost of the accommodation component was $2,403.80. The email provided that the total cost of the trip was $3,133.66 and that savings of $1,626.20 could have been made if the plaintiff had booked the Best Western Plus Hotel at Carrington (the Best Western). Mr Findlay did not approve the first travel request within the required time and it was automatically cancelled.

41. It was common ground that the Best Western was located at Shepparton, about two hours from the company headquarters at Port Melbourne and that it would not have been practical for the plaintiff to stay there to work at Port Melbourne during the January business trip.

42. It was also common ground that the Crown was an approved hotel, that the plaintiff had stayed at the Crown before and that it was a hotel convenient to TMCA’s corporate headquarters at Port Melbourne. On 14 December 2017 the plaintiff stayed at the Crown for work purposes. On 15 December 2017 he complained about the state of the room when checking out. Later that day he spoke to Ms Kaval Dhillon, the Front Office Supervisor of the Crown, on the telephone. At 10.26pm on that day, Ms Dhillon sent an email to the plaintiff confirming their conversation and offering him a “complimentary upgrade” and “access to 28 Skybar” [5] on his next visit in January.

    5. A corporate lounge area.

The second travel request

43. On 12 January 2018 the plaintiff made a further booking on the Serko system for the same Melbourne trip (the second travel request). An email was sent by the travel agent to Mr Findlay to approve the second travel request. The email described the room at the Crown including the words “Loft 80 Sqm” and specified that the total cost of the accommodation component was $3,823.30. The email provided that the total cost of the trip was $4,536.55 and that savings of $3,045.70 could have been made if the plaintiff booked the Best Western. The airfare in that booking was the same as the earlier one and the rental car was slightly cheaper, but the cost of the accommodation component increased by a bit more than $1,400. Mr Findlay approved the second travel request.

Events of 14 January 2018

44. On his way to the airport on the evening of 14 January 2018, the plaintiff was delayed by traffic and missed the flight to Melbourne. He arranged to get on a later flight, without incurring further cost. It was not clear from the evidence as to when the email correspondence took place with Ms Dhillon, by reference to the missed flight.

45. At 6.11pm on 14 January 2018, the plaintiff sent an email to Ms Dhillon informing her that he was arriving late that evening and asking her to confirm that she would look after him with a complimentary upgrade to a suite as she had previously mentioned in their conversation on 15 December 2017.

46. At 8.09pm on 14 January 2018 Ms Dhillon sent an email to the plaintiff. She stated “I have just looked into your reservation, your company has already booked a Loft suite for your stay”. She offered him and his family complimentary access to 28 Skybar.

47. At 8.38pm the plaintiff sent an email to Ms Dhillon. He stated, “Thank you for coming back to me so promptly. The cost of my stay per night is $637.22 which is very high Kaval. The only reason I chose the Crown Metropol over Pan Pacific was you had assured me I would be upgraded to a suite with my family”.

48. At 9.01pm on 14 January 2018 Ms Dhillon sent an email to the plaintiff. She stated “I am very sorry for the confusion. Would you please be able to cancel the booking, and re-book as normal Luxe king? Then I would be able to give you a complimentary upgrade to Loft suite”.

49. At 9.31pm on 14 January 2018 the plaintiff sent an email to Ms Dhillon. He stated, “I will not be arriving with my family to very late tonight, or early tomorrow morning. The reason is I am now on the last flight out of Sydney to Melbourne! It is due to land at 11.35pm, by the time I have my luggage (along with my family) hopefully Hertz will still be open for me to pick up my loan vehicle. Then head to Crown Metropol…”

The Melbourne business trip

50. On 14 January 2018 the plaintiff travelled with his wife and children to Melbourne. The plaintiff paid for his family’s air travel using his personal credit card. The plaintiff and his family stayed in the Loft suite at the Crown and did not require extra bedding to do so.

51. The plaintiff worked from the Port Melbourne office from Monday 15 January 2018 to Friday 19 January 2018.

52. On 19 January 2018 the plaintiff and his son were in the Port Melbourne office at about 6.00 to 6.30pm. They had a conversation with Ms Buchanan at that time.

53. The last Qantas flight to Sydney on 19 January 2018 departed Melbourne at 9.00pm.

54. At about 9.45pm on 19 January 2018 the plaintiff was provided with a tax invoice for a meal at the Common Man Restaurant in Melbourne (the Common Man). The tax invoice contained an entry for food at the cost of $22.50 and a pint of Heineken beer at the cost of $10.00 and contained the entry “Covers:1”. The tax invoice was paid for by the plaintiff using his corporate credit card.

55. On Saturday 20 January 2018 the plaintiff and his family returned to Sydney.

The plaintiff’s submission of expenses

56. On 15 February 2018 Mr Findlay advised the plaintiff that he had outstanding expenses on his corporate credit card of $21,599.98 dating back to August 2017 and that the expense reports needed to be submitted through Concur with a valid tax invoice attached, before his redundancy package could be released. The plaintiff’s corporate credit card was cancelled on that date.

57. On 21 February 2018 the plaintiff was asked to participate in a Skype meeting with Mr Findlay and Rachel Eather from Human Resources about his expense reports. Ms Eather’s record of that meeting which was not disputed by the plaintiff provided as follows:

58. Meeting with Greg Sherry & Steve Findlay

59. RE: Outstanding Expenses

60. Wednesday, 21 February 2018 at 8am via Skype

1. RE: Toyota has some serious concerns about your conduct as you have over $21k in outstanding expenses – these expenses date back to 30 August 2017. As you are aware, you are required to submit your expenses on a monthly basis and your failure to do so means you have engaged in and continue to engage in serious breaches of Toyota’s expense policies and your employment obligations.

2. RE: Can you please explain how and why this has occurred?

GS: I needed to get my head around SAP and then Concur came out and I didn’t understand it.

I need to apply it to myself

I do understand the seriousness of the matter

I do have all the receipts and I think it’s a mental issue, I just need to get it done

It’s a bit like an elephant I don’t know where to start

1. RE: Are any of these expenses personal expenses?

GS: No, I just discussed this with Steve, there are some receipts with no tax invoice however I will chase this up

1. RE: You were specifically directed by your manager last week to submit your expense by Friday 16/02, yet you have not done this. Why not? What is the reason for the delay?

GS: As mentioned above, I do apologise, it is my fault.

1. RE: As of today, have you entered all expenses in Concur?

GS: I have started, but not all done, I am back in the office Friday, I will place them all in Concur by Friday.

1. RE: We need to advise you that your failure to submit your expenses over such a long period of time has resulted in Toyota being charged interest on your outstanding expenses. As a result of your serious breaches of policy, you will be required to sign a payroll deduction form to reimburse the company the amount of interest charged. Do you acknowledge this?

GS: Yes I do acknowledge I need to repay the interest

1. RE: At this stage, you will not receive your redundancy package until your expenses have been settled and interest repaid.

GS: I understand this

1. RE: Is there anything else we should know in relation to this matter?

GS: I do understand the severity of this issue, I will dedicate this Friday to complete all my expenses

I understand this is a block for me, back mark against my name, I do apologise to the both of you and Toyota.

SF: On a separate matter you are required to sit near Joe Bondin’s team, he can assist you with your expense and also assist you with your daily work

RE: it is also a safety issue as working alone is not ideal

GS: I will do this from Friday when I am back in the office

Next Skype meeting: Monday, 26 February

61. On Friday 23 February 2018 the plaintiff submitted two expense reports through Concur.

62. On Saturday 24 February 2018 Mr Findlay advised Ms Buchanan and Ms Eather by email that he had returned one expense item with a value of $1,110.80 submitted by the plaintiff because he had allocated it to the wrong cost centre and seven items with a value of $1,855.89 which he returned for the following reasons:

Hi Greg

1/. Your receipt for St Moritz is stating 2 people we served, please provide the details of the 2^nd person for FBT reasons

2/. Your Syd A/P parking is expensive at $330 + GST ($363), this equates to about $47 per day which would have been short term parking when we would have expected long term parking for a business trip of this duration, is this correct.

63. On Monday 26 February 2018 the plaintiff told Mr Findlay in the course of a Skype meeting that he would be continuing to work on submitting his expenses on that day.

64. As at Tuesday 27 February 2018, the plaintiff still had outstanding expenses in the sum of $13,889.84 relating to the period 27 August 2017 to 27 November 2017. From this expense report, it is apparent that the expenses that are the subject of these proceedings, with the exception of the amount of $180 relating to the Telstra Dongle paid in September 2017, were submitted by the plaintiff through the Concur system on 23 February 2018.

65. On 8 March 2018 Ms Eather sent an email to Ms McCarthy relating to her contact with the plaintiff relating to his expense claims, because Ms Eather was going on leave. The email referred to a number of documents that were accessible through a hyperlink in the email. Crucially, the document referred to in paragraph 1 of the email dated 8 March 2018 and entitled “Investigation Notes – Greg Sherry.docx” which I infer was prepared by Ms Eather was not tendered by TMCA.

The meeting of 14 March 2018

66. On 14 March 2018 Ms Buchanan required the plaintiff to attend a meeting with her and Ms McCarthy without prior notice to put to him allegations that he had breached TMCA’s policies relating to his expense claims for the stay at the Crown and the Telstra Dongle. Ms McCarthy made typewritten notes during the meeting. Ms Buchanan made notes on her phone through an application known as “Evernote”.

67. Both parties relied heavily on the notes taken in the course of the 14 March 2018 meeting. On one view, there was not much in dispute between the parties about what was said at the meeting. On another view, it was contended that the plaintiff was taken by surprise in the meeting, that the questioning of him was aggressive and that he was not in the best position to recall what was said. The notes of the meeting are not a transcript of what was said and some caution should be exercised not to interpret them in that way. For example, there must have been further discussion about the Common Man expense that is not referred to in Ms McCarthy’s notes to identify it as the relevant meal where the plaintiff had his son with him. Further, I am satisfied, for reasons for reasons that I will come to, that Ms Buchanan and Ms McCarthy made their notes for their own purposes at a time when they held unfair adverse views of the plaintiff and the notes are not an impartial record of what was said. Having said that, there are entries on which both parties can legitimately rely.

68. Ms McCarthy’s document contained the following salient entries:

NMc:   According to Concur and after further clarification with your manager you have identified 5 expenses to be personal expenses. Can you confirm this?

GS:   Yes

NMc:   Do you understand these are breaches of the Expense Reimbursement Policy?

GS:   Yes

NMc:   During your Skype meeting with Rachel Eather and Steve Findlay on 21 February 2018 you were asked whether you have any personal expenses and you said no. Why did you lie?

GS:   Because I had so many outstanding- and the reason is my fault in being slack in putting them through and struggling with concur. As far as I knew the vast majority of chargers (sic) are work related. 99/95% - the vast majority.

NMc:   I am now going to ask about specific details for each personal expense. The first personal expense relates to your request of a Telstra Wi Fi device on 24 September 2017 at a cost of $180. Is this a personal expense?

GS:   No

NMc:   Why did you put it as personal?

GS:   Steve queried this expense – it is a dongle which I use that the company reimbursed previously. I use it to access the network for training purposes and to get into applications. I have also used it to access my emails. I have previously charged it to my credit card and it has been reimbursed.

NMc:   When was the last time it was reimbursed?

GS:   12 months ago. Agreement by my previous managers that it would be paid. Steve told me that it would not be reimbursed so I put it as a personal expense. It’s a 12 month thing.

NMc:   Why did you use the company credit card?

GS:   That is what I have done previously. It is for work use.

NMc:   Are you still using the device for personal or company use?

GS:   Don’t use it for personal use. I’ll use it to access emails. Steve said to me that I can use mobile hotspot having the mobile phone. I wasn’t aware of it and I had a Nokia before this. I’ve had the iPhone for about 12 months. The thinking was that National Service would pay for the dongle because of me delivering training across Australia.

NMc:   The second personal expense relates to your stay at the Crown Metropol from 14 January 2018 to 20 January 2018. The total amount is $4,273.78. We have confirmed with your manager that he approved your travel dates. Was this a personal expense?

GS:   No it wasn’t. My family came down with me. My wife, son and daughter.

NMc:   Did you tell your manager that they were coming?

GS:   No

NMc:   Why?

GS:   I wasn’t aware that I had to tell my manager. I had my son Darcy with me and brought him into the office and he met Gerri [Ms Buchanan]. I mentioned that I had my family with me. I didn’t do anything inappropriate. I know the room was expense (sic) however I chose the Crown Metropol because it was an approved hotel. The Australian Open was on, the rates were up and yes I know that it was expensive. I certainly wasn’t aware that I needed to make management aware that my family was coming with me. If that had been the case then I certainly would have done so.

NMc:   Having your family would have required more room?

GS:   There was adequate room for them. Yes the room was expensive. Steve and I have gone through the invoice line by line and I have agreed to pay $1,500. But I don’t know how to do a payroll deduction through concur.

NMc:   How did you choose the room?

GS:   It was the only room available. That was the room that came up in the system. Yes I know it was expensive yes the family was with me. In hindsight I should have booked somewhere else.

NMc:   Did you have the intention of booking a room big enough for your family?

GS:   No. The room was extravagant. I know. I should not have chosen that room. Yes the family was with me. Yes there was plenty of room. Please don’t think that is the way I operate because I certainly don’t. With that room being available and with the family being with me I thought yes that’s great. It was school holidays. I was down there for the week. It didn’t impinge on the time that I was at work.

GB:   My recollection of the system is that it will come up with a range of rooms – king, twin bed. We’re trying to understand.

GS:   It was on the system. Of the preferred hotels …

GB:   You can broaden your search. Preferred is the first option where it is more convenient or costs effective.

GS:   I haven’t stayed in such a room before. I know how it looks. I knew it was expensive and the family were going to be with me.

NMc:   Did you consider other options?

GS:   Yes – I don’t do things ad hoc. I went with Crown knowing the family would be with me. The Metropol. It upsets me that I am under the spotlight because that is not me. Yes it was extravagant. I apologise, I certainly do not operate like that. I appreciate you both taking the time to talk to me. To get my expenses done is a huge monkey off my back. People are either paperwork people or their [sic] not. I got my head around SAP and the system changed. I have always struggle with expenses and felt relieved that I got them in. The amount of expenses was embarrassing. You’ve inherited me with my expenses. To get them in was a huge task. Steve was very good and offered to help. I’ve got myself into this mess.

NMc:   Is there a reason you didn’t tell Steve about the room booking?

GS:   No.

NMc:   Why did you stay an additional night?

GS:   We all flew in on the Sunday night (the family). I paid for the family’s flight. We left on the Saturday afternoon.

NMc:   When did you pick up the car?

GS:   When we arrived.

NMc:   What time?

GS:   Around 10 o’clock.

NMc:   Why did you stay the additional night?

GS:   With the family being with me – if I had been on the 6am flight it would have been the logistics of that. Normally I would have flown out on the Friday.

NMc:   So there was additional night spent there with your family on the company credit card?

GS:   We didn’t charge anything to the room.

NMc:   But you paid for it on the company credit card?

GS:   Yes.

NMc:   At the time did you think that was appropriate?

GS:   No.

NMc:   Why didn’t you report this to your manager immediately?

GS:   Looking at all the expenses I had all of those months. That was just one of those invoices that I had to process. At the time – the additional time and the family being with me – yes it was inappropriate Nicky. I know I should have separated anything additional and yes I should have paid for that personally.

NMc:   Did you spend any other money on your credit card that was for your family?

GS:   There was one meal where I had my son. Any other meals for the family we paid for personally.

…

NMc:   Have you claimed for personal expenses in the past?

GS:   No.

NMc:   Are there any further comments you would like to add?

GS:   No.

NMc:   I would like to remind you this is a serious breach of company policy. We will now review all the relevant data and respond in due course.

GS:   I am not wired like that. The corporation has been very good to me over many years. I appreciate Steve and Gerri extending my time. I don’t want this to tarnish my reputation which is all that we have in this life. I thank you both for getting together with me. I would rather sort things out.

The other thing I wanted to mention is that I have printed off the payroll deduction forms. I’d asked Steve for some guidance on how to put the deduction through. That was at the tail end of all of this. I simply didn’t know how to do it. When Steve had queried me about all of this.

*** Interview resumed at 2.08pm

Gerri located the invoice for the dongle which appears to be a monthly bill.

NMc:   Is this a 12 month contract or a monthly contract?

GS:   If you take it over a 12 month period the price is less. The $180 is an annual fee.

NMc:   You need to be truthful and honest. This is an investigation.

GS:   Not doing anything wrong with this. I purchased the dongle.

GB:   I’ve had a dongle before and it cancels out every month.

GB:   The invoice suggests it is a monthly charge.

GS:    I can give you my log on.

GB:   Do you have any copies from last year’s receipts?

GS:   No – not that I can find. I can go onto their website and give you a screen shot.

Greg left the room to retrieve an email relating to this at 2.15pm.

NMc:   Is this a personal or work related expense?

GS:   No it’s not Nicky. I use it for training purposes and to check my email.

NMc:   We have no further questions. Please go back and look for more information regarding the dongle and provide this to us for the investigation. ****

69. On 14 March 2018, Ms McCarthy commenced preparing a document entitled “Confidential Investigation Summary” that was dated 14 March 2018 (the Investigation Summary). Ms McCarthy gave evidence that the Investigation Summary was completed on a later date and that was supported in one respect in that it contained a reference to a telephone conversation she had with Mr Findlay that occurred on 16 March 2018. Ms McCarthy could not recall the precise date on which the Investigation Summary was completed. In the Investigation Summary Ms McCarthy concluded that:

1. the Telstra Dongle was for the plaintiff’s personal use;

2. the plaintiff stayed in Melbourne on 19 January 2018 for an additional night that was not business related;

3. the plaintiff deliberately booked the Loft suite at the Crown because it was a larger room to accommodate his family;

4. the plaintiff paid for a meal for his son at the Common Man on 19 January 2018;

5. the plaintiff had been deliberately evasive and dishonest during the investigation; and

6. the plaintiff had refused to submit his corporate credit card expenses “hoping that he would get away with charging personal expenses to his corporate credit card prior to his redundancy at the end of March”.

70. On 23 March 2018, Ms McCarthy sent an email to the plaintiff in the following terms:

I refer to your meeting with Geraldine Buchanan and I on 13 March 2018.

Allegations

During this meeting, we informed you that Toyota had commenced a formal investigation as a result of a number of very serious concerns about your alleged conduct in respect of the following matters:

Your Melbourne business trip between 14 and 20 January 2018; and

Your purchase of a pre-paid Telstra service without Toyota’s authority.

• Business Trip

•    We asked you about the details surrounding your accommodation at    Crown Metropol. In particular, Toyota’s concerns that you:

• booked a much larger room for your business trip than was required in order to accommodate your wife and two children. The total cost of the room was $4,273.78, which is approximately $1,542.00 more than Toyota would reasonably expect to pay for accommodation for one person for 5 nights for a business trip;

• booked an additional night of accommodation with your family at Toyota’s expense;

• failed to inform your manager of your intention to book a larger room to accommodate your family; and

• purchased a meal on your corporate credit card for your son on 19 January 2018 at the Common Man Restaurant in South Wharf, Melbourne.

• Telstra Service

• In September 2017, you charged $180 to your corporate credit card to pay for a pre-pay Telstra service related to mobile charges. This Telstra service had not been issued to you by Toyota and you were not authorised to charge the costs of the device to Toyota.

• Breaches

• If proven, one or more of these allegations may constitute a serious breach of Toyota’s Accommodation Procedure, Travel Procedure, Expense Requirement Policy, the Code of Ethics and the terms and conditions of your employment as set out in your employment contract.

• Next Steps

• Toyota is in the process of finalising its investigation. The investigation remains confidential and you must not discuss it with anyone except those directly involved (being Geraldine and me).

• We will be in contact with you shortly to inform you of the outcome of your investigation.

71. At no time during the course of the investigation did TMCA make enquiries of the Crown or the travel agent to determine if the plaintiff’s claim that the Loft room he selected in the second travel request was the only room available was true. Similarly, TMCA did not seek to interrogate the Serko system to determine if the plaintiff’s claim was true.

72. Ms McCarthy made one attempt to contact each of Mr Irwin and Mr Chellingworth in relation to the Telstra Dongle approval. She telephoned a number that she had for each of them but could not make contact with either of them. Ms McCarthy did not try to contact Mr Langridge.

73. The decision to terminate the plaintiff’s employment was made by Ms Buchanan. She gave evidence that she discussed the decision with Mr Hobbs, but she gave no evidence of the content of those discussions.

74. On 28 March 2018 a meeting took place with the plaintiff, Ms Buchanan and Ms McCarthy in attendance. Ms Buchanan informed the plaintiff that TMCA had found that the Telstra Dongle was for personal use and that the plaintiff had used his corporate credit card to incur personal expenses during the Melbourne business trip. The plaintiff was provided with a letter dated 28 March 2018 signed by Ms Buchanan terminating his employment (the termination letter) that stated:

We refer to our letter to you dated 23 March 2018, in which you were advised that Toyota was in the process of finalising its investigation into allegations that you breached a number of its policies and procedures in relation to:

your Melbourne business trip in January 2018; and

your purchase of a pre-paid Telstra service without Toyota’s authority.

Toyota has now finalised its investigation and made the following factual findings on the balance of probabilities:

that you deliberately booked a larger hotel room than was necessary for your business strip to accommodate your family;

that you booked an additional night in the hotel for personal purposes at Toyota’s expenses;

that you purchased a meal for your son on 19 January 2018 on your corporate credit card;

that you charged $180 to your corporate credit card for a personal Telstra service without Toyota’s knowledge or authority; and

that you have been dishonest in relation to these matters in two key respects:

on several occasions when questioned by your manager and Rachel Eather, HRBP about your expenses, you stated that you did not have any personal expenses on your corporate credit card. You later admitted during the investigation that you did in fact have personal expenses on your corporate credit card; and

on the balance of probabilities, Toyota considers that you deliberately failed to process your expenses for approximately six months, despite repeated direction from your manager that you do so, as you were aware that some of those expenses were personal.

Based on these factual findings and all of the information you have provided to date, including your responses during our investigation, Toyota has formed the view that you have engaged in serious misconduct in breach of your employment obligations. In particular, you are in breach of the following:

1. Toyota’s Accommodation Procedure: failure to select lowest cost and most practical hotel and failure to reserve a standard room;

2. Toyota’s Travel Procedure: combining personal and business travel in breach of the procedure and paying for personal expenses on a corporate credit card;

3. Toyota’s Expense Reimbursement Policy: use of corporate credit card for non-business expenses;

4. Code of Ethics: acting dishonestly causing actual financial loss to Toyota; improperly using your position as a Level 4 with a credit card for personal financial benefit and engaging in behaviour that does not benefit Toyota; and

5. The terms and conditions of your employment: failing to act faithfully and diligently, acting in conflict with Toyota’s best interests and failing to act in a professional manner.

Toyota has made the decision to terminate your employment for serious misconduct effective immediately.

You must immediately return to Toyota all of its property which you have in your possession, including but not limited to all documents containing confidential information in hard and soft copy, your vehicle and fuel card, and your security access card.

Toyota will pay you $49,621.40 NET [12 weeks’ notice + leave], being 12 weeks in lieu of notice and all outstanding entitlement accruals by EFT into your nominated bank account, less:

appropriate taxation; and

$1,754.50, representing the following amounts:

$180, the cost of your Toyota dongle, which Toyota considers on the balance of probabilities is a personal expense;

$32.50, being the cost of your son’s meal on 19 January 2018; and

$1,542, being the amount Toyota reasonably considers represents the additional expense it incurred as a result of your decision to (a) book a large hotel room to accommodate your family while you were on a business trip and (b) stay an additional night for personal reasons following your business trip.

Toyota can provide you with support via our Employee Assistance Program, should you wish to utilise it. As you are aware, this is a free, confidential, short term counselling service which may assist you during this period. You can contact this service on XXX.

75. Ms McCarthy’s evidence was that the termination letter was drafted by her with the assistance of an in-house lawyer of TMCA.

76. The termination letter stated that TMCA would pay an amount inclusive of “payment in lieu of notice” into the plaintiff’s nominated bank account. There was no documentary evidence as to when the payment was actually made into the plaintiff’s bank account.

TMCA’s Policies

77. At all material times, TMCA had in place a number of written policies and procedures of which the following provisions were relevant to the determination of the case. I have set out the relevant extracts of the policies that I was referred to in Appendix 1 of the judgment.

Mr Sherry’s Case at Trial

78. The plaintiff’s case at trial was that he was he had not engaged in serious misconduct and that TMCA’s termination of the employment contract was wrongful and amounted to a repudiation of it, because it amounted to a clear indication of a refusal by TMCA to perform: Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444 at 453. This general principle extends to wrongful dismissal by an employer: Automatic Fire Sprinklers Pty Ltd v Watson (1946) 72 CLR 435.

79. The plaintiff is entitled to loss of bargain damages for TMCA’s repudiation of the employment contract: Esanda Finance Corp Ltd v Plessnig (1989) 166 CLR 131 at 143.

80. In assessing the loss of bargain damages in this case, the Court is entitled to consider what would have happened if the termination had not occurred: Maredelanto Compania Naviera SA v Bergau-Handel GmbH (The Mihalis Angelos) [1971] 1 QB 164. Damages should be assessed by reference to the facts that are known at the time of assessment: Golden Strait Corp v Nippon Yusen Kubishika Kaisha (The Golden Victory) [2007] AC 353 and Bunge SA v Nidera BV [2015] UKSC 43 at [20].

81. In the present case, if the termination had not occurred, the plaintiff’s position would have become redundant on 31 March 2018 and the redundancy clause provided that TMCA would make redundancy payments in accordance with the applicable industrial legislation or such other sum commensurate with the plaintiff’s seniority within the company. On 31 July 2017 TMCA had represented to the plaintiff that his redundancy payment would be $379,268.10 gross ($290,359.10 net).

TMCA’s Case at Trial

82. TMCA bore the onus of establishing that it had a right to terminate the performance of the contract: Smith v Butler [1900] 1 QB 694 at 699.

83. TMCA was entitled to justify its election to terminate on the basis of any right of termination that was available to it at the time of termination: Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359 and Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd (1938) 61 CLR 286 at 305.

84. TMCA contended that the plaintiff had:

1. engaged in “serious misconduct” as defined in the summary dismissal clause of the employment contract; and/or

2. engaged in serious misconduct as defined at common law in the nature of:

1. conduct incompatible with the fulfilment of an employee’s duty, involving an opposition to or conflict with the interests of the employer, impeding faithful performance of the employee’s obligations or that was destructive of the necessary confidence between the employer and the employee: Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66 at 81.

2. a breach of the obligation not to engage in conduct incompatible with employment: Melbourne Stadiums Ltd v Sautner (2015) 229 FCR 221 at [12], [55] and [87].

3. a habitual neglect or definite refusal of a general kind to pursue the employer’s lawful policy of business: Adami v Maison de Luxe Ltd (1924) 35 CLR 143 at 153 and Sautner at [19].

4. dishonesty: Condren v Southport Workers Community Club Inc [2010] QSC 130 and Seventi v John Holland Group Pty Ltd [2006] FCA 1049.

5. a failure to provide a full and frank disclosure: Coope v LCM Litigation Fund Pty Ltd (2016) 333 ALR 524 at [140].

85. TMCA expressly disavowed any reliance on the notice clause in the termination of the plaintiff, stating that the purported payment in lieu of notice described in the termination letter was an “ex gratia payment”. TMCA did not allege or seek to prove that the words in the termination letter were capable of amounting to an exercise of the notice clause. As a matter of principle I assume that TMCA accepted that the termination letter was an election by it to rely on the summary dismissal clause which was an alternative and inconsistent right to the notice clause: Sargent v ASL Developments Ltd (1974) 131 CLR 634 at 641. This accords with the observation that TMCA’s reliance on the summary dismissal clause was intended to immediately terminate the employment contract, whereas reliance on the notice clause would have resulted in the employment contract continuing for a short time until the notice period expired or a payment in lieu of notice was made.

86. TMCA did not contend that the plaintiff’s conduct repudiated the employment contract, relying on the proposition that an employee’s conduct does not need to amount to repudiation (by renunciation) of the employment contract to justify summary dismissal: Rankin v Marine Power International Pty Ltd (2001) 107 IR 117 at [254] and Melbourne Stadiums v Sautner (2015) 254 IR 1 at [125].

87. TMCA properly abandoned some of the matters it relied on for the plaintiff’s summary dismissal that were set out in the letter of 28 March 2018. Clearly the allegation that the plaintiff deliberately delayed putting in his expense claims to sneak through some personal expenses was untenable, for the reasons set out at [214].

88. TMCA contended at trial that the plaintiff’s summary dismissal was justified on the following grounds:

1. The plaintiff booked a larger hotel room than necessary to accommodate his family (Ground 1).

2. The plaintiff booked an extra night of hotel accommodation on 19 January 2018 for personal purposes (Ground 2).

3. On 19 January 2018 the plaintiff purchased a meal for his son on his corporate credit card (Ground 3).

4. Without TMCA’s knowledge or authority the plaintiff used his corporate credit card to purchase credit on the Telstra Dongle service, for personal use (Ground 4).

5. The plaintiff was dishonest when asked about these expenses (Ground 5).

89. On damages, TMCA contended that if it failed to establish the right to terminate the employment contract for serious misconduct, then it would have relied on the notice clause and by making payment in lieu of notice the employment contract would have been terminated on the date that the payment was made: Sautner and Geys v Société Générale London Branch [2013] 1 AC 523.

90. Further, or in the alternative, TMCA submitted that the plaintiff had failed to mitigate his damages and or to provide evidence of his earnings in the period after his termination in order for those earnings to be taken into account. TMCA also contended that as a matter of construction it was not obliged to make a redundancy payment to the plaintiff and that it retained a discretion to pay a lesser amount to that which it had previously indicated.

Disputed facts

91. I will now turn to the evidence of each witness that was in dispute and make findings on the factual issues.

92. No witness called in the case, with the exception of Mr Langridge, gave evidence that was wholly capable of acceptance. There was minimal objective evidence that could be relied on. The contemporaneous notes of the meetings on 14 March 2018 and 28 March 2018 are unsatisfactory for the reasons given at [64] and [280]. In the end, I am satisfied that those notes were not an objective or complete record of what was said at them, but rather they were slanted towards the matters that Ms Buchanan and Ms McCarthy wanted to record and later rely on.

93. TMCA’s case involved allegations of dishonesty on the part of the plaintiff and the case involves significant issues of credit for each of the witnesses called. Accordingly it is necessary to have regard to the following legal principles.

94. A party must establish its case on the balance of probabilities taking into account factors including; the nature of the cause of action or defence, the subject matter of the proceedings and the gravity of the matters alleged: s 140 Evidence Act 1995.

95. Where the law requires the proof of any fact, the Court must feel an actual level of persuasion of its occurrence before it can be found. It cannot be found as a result of the pure mechanical comparison of probabilities independent of any belief in its reality. It is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the Court. Reasonable satisfaction is not a state of mind that is established independently of the nature and consequence of the fact or facts to be proved. The seriousness of the allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity or consequences flowing from a particular finding are considerations which must affect the answer to the question, whether an issue has been proved to the reasonable satisfaction of the Court: Briginshaw v Briginshaw (1938) 60 CLR 336 per Dixon J at 360-361.

96. The determination of the case is likely to require findings of dishonesty and/or fraud and a finding on the balance of probabilities of such matters should not be made lightly: Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 67 ALJR 170 at 170-1 per Mason CJ, Brennan, Deane and Gaudron JJ.

97. “[D]ishonesty is usually a matter of inference from primary facts”: Three Rivers District Council v Bank of England (No 3) [2003] 2 AC 1 at [186] per Lord Millet cited with approval in Pharm-a-Care Laboratories Pty Ltd v Commonwealth of Australia (No 3) (2010) 267 ALR 494 at [69] per Flick J, Spiliotopoulos v National Australia Bank Ltd [2017] NSWSC 971 at [33] per Harrison J and Polar Aviation Pty Ltd v Civil Aviation Safety Authority (No 4) [2011] FCA 1126 at [110] per Kenny J.

98. The relevant principles were considered in Palmer v Dolman [2005] NSWCA 361 at [33]-[47] by Ipp JA (Tobias and Basten JJA agreeing) and can be summarised as follows:

1. it is sufficient in a civil case that the circumstances raise a more probable inference in favour of what is alleged;

2. the Court must consider the weight which is to be given to the united force of all the circumstances put together. The onus of proof is only to be applied at the final stage of the reasoning process. It is erroneous to divide the process into stages and, at each stage, apply some particular standard of proof. To do so destroys the integrity of a circumstantial case;

1. the inference drawn from the proved facts must be weighed against realistic possibilities as distinct from possibilities that might be regarded as fanciful;

2. where the competing possibilities are of equal likelihood, or the choice between them can only be resolved by conjecture, the allegation is not proved; and

3. the inquiry is simply, taking due account of what was said in Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd, has the allegation been proved on a balance of probabilities.

99. While a more probable inference may fall short of certainty, it must be more than an inference of equal degree of probability with other inferences, so as to avoid guess or conjecture. In establishing an inference of a greater degree of likelihood, it is only necessary to demonstrate that a competing inference is less likely, not that it is inherently improbable: Lithgow City Council v Jackson (2011) 244 CLR 352 at [94] (Crennan J).

100. In Coote v Kelly [2016] NSWSC 1447 at [100] - [102] Davies J collected a number of appellate and/or persuasive authorities that provide assistance on the assessment of credit and the fallibility of human memory. From his Honour’s collection, the following salient points are relevant to deciding the issues in this case:

1. Memory can be affected by faulty storage of the event and this can be impacted by unconscious bias, wishful thinking or extensive discussion with others. “Witnesses, especially those who are emotional, who think that they are morally in the right, tend to very easily and unconsciously conjure up a legal right that did not exist.” This can lead to a witness, however honest, trying to convince a court that their present recollection of an event is superior to the contemporaneous note of it: Onassis v Calogeropoulos v Vergottis [1968] 2 Lloyd’s Rep 403 at 413 (Lord Pearce).

2. The process of civil litigation subjects the memories of witnesses to powerful biases, particularly where the witness has a stake in a particular version of events. This is obvious where the witness is a party or has a tie of loyalty to a party in the proceedings, such as an employment relationship: Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC 3560 at [19].

3. Considerable interference with memory is also introduced by the process of preparing for trial, especially through the preparation of witness statements. Witness statements are drafted by lawyers who are conscious of the issues of the case and by what witnesses do and do not say. Statements are often made after refreshing memory from documents that contain argumentative material that may not be admissible. Many iterations of a statement may exist before it is finalised. The effect of the process is to reinforce the matters recorded in the statement and other written material, irrespective of its truth: Gestmin at [20].

4. It is difficult for witnesses to distinguish between recollection and reconstruction because the processes underlying the difference are largely unconscious and the strength of a belief or memory is not a reliable measure of its truth: Gestmin at [21].

5. The preferable course for a judge is to place little reliance on witnesses’ recollections of what was said at meetings and to base factual findings on inferences drawn from contemporaneous documents or known or probable facts, but that is not to say that oral testimony serves no useful purpose: Gestmin at [22].

6. Human memory of what was said in a conversation is fallible for a variety of reasons, which ordinarily increases with the passage of time and the intervention of litigation. The processes of memory are often overlaid, often subconsciously, by perceptions of self-interest as well as conscious consideration of what should have or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are repeatedly sub-consciously reconstructed: Watson v Foxman (1995) 49 NSWLR 315 at 319 (McLelland CJ in Eq).

7. The observation of the demeanour of witnesses is a crude and inaccurate methodology and its defects have been exposed on numerous occasions: Fox v Percy (2003) 214 CLR 118 at [30]-[31].

8. The credibility of a witness and his or her veracity can be tested by reference to the objective facts particularly those provided in contemporaneous documents, his or her motive and the overall probabilities: Armargas Ltd v Mundogas SA (The Ocean Frost) [1985] 1 Lloyd’s Rep 1 at 57 (Lord Goff).

9. Where a trial judge is faced with a stark choice between irreconcilable accounts the credibility of witness testimony and the trial judge’s assessment of the character of those witnesses and the manner in which the witnesses gave their evidence, is of primary importance: McGraddie v McGraddie [2013] 1 WLR 2477.

10. Rational resolution of an issue involving the credibility of witnesses will require reference to and analysis of any evidence independent of the witness that is apt to cast light on the probability of the situation: Camden v McKenzie [2008] 1 Qd R 39 at [34] (Keane JA), cited with approval in New South Wales v Hunt (2014) 86 NSWLR 226 at [56] (Leeming JA, Barrett JA and Tobias AJA agreeing).

11. A court considering historical events will usually prefer to rely on the content of contemporaneous or near contemporaneous documents, because they are likely to be more accurate than flawed attempts of recollection of the facts. Such documents are usually a safer repository of reliable fact, particularly where they are prepared by a person with no reason to misstate the facts in them: Bathurst Regional Council v Local Government Financial Services Pty Ltd (No 5) [2012] FCA 1200 at [1247] (Jagot J) and Hughes v Barbara Mines Ltd (No 4) [2010] WASC 160 at [157] (K Martin J).

101. The unexplained failure of a party to give evidence or to call a witness may lead to an inference that the uncalled evidence would not have assisted the party’s case: Jones v Dunkel (1959) 101 CLR 298.

102. The principle in Jones v Dunkel may be applied more readily when a party fails to adduce particular evidence from a witness that it calls in chief on a particular topic, because the most natural inference is that the party fears to do so because it would have exposed evidence unfavourable to that party: Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418-419 (Handley JA).

The Plaintiff’s Witnesses

Mr Sherry’s Evidence

103. The following summary sets out only the evidence that was in dispute or is relevant to my findings on credit. [6]

     6. I have adopted the same approach to each of the witnesses.

104. The plaintiff’s evidence was that he used the Telstra Dongle for training and that it was on a prepaid service that cost $180 to top up about every 6 months. When he first obtained the Telstra Dongle he did not have a smartphone from which he could connect his laptop to the internet. His evidence was that the use of the Telstra Dongle and his claiming of the cost of the service was approved by TMCA after discussions with Mr Chellingworth and he provided evidence of payment for the service a number of times on the corporate credit card, for which reimbursement was approved by Mr Chellingworth or Mr Irwin. This was corroborated by Mr Langridge and by the evidence that Mr Chellingworth had approved this expense on a number of previous occasions.

105. The plaintiff’s evidence was that at the time of the second travel request that the Serko system only offered him one room at the Crown, which he selected. At the time he did so he knew that the room was expensive, which he understood to be the result of the demand for rooms caused by the Australian Open which was taking place in Melbourne. The second travel request was approved by Mr Findlay.

106. On Friday 19 January 2018 the plaintiff worked at the Port Melbourne office until about 6.00pm. He then went to meet his family, before returning to the office with his son because he had left his computer behind. The plaintiff and his son had a conversation with Ms Buchanan.

107. The plaintiff’s evidence was that it was common for him to stay overnight on the last day of a business trip depending on the nature of the work and the time that work finished on the last day and that this had never been questioned previously. At the time when the second travel request was made the plaintiff did not know when he would finish work on 19 January 2018 and he believed that he might have been required to stay late and bearing in mind that he expected the last flight to Sydney to depart Melbourne at about 9.30pm.

108. The plaintiff then took his family to the Common Man at South Wharf. The plaintiff produced a credit card receipt for his personal credit card in the sum of $50.50, which he deposed was for the purchase of meals for his family. The disputed expense related to the purchase of his meal in the sum of $32.50. The tax invoice for the disputed expense was printed at 9.45pm. The plaintiff’s evidence was that his son ate one or two slices of pizza that remained after he finished eating.

109. On or about 1 March 2018 the plaintiff had a meeting with Mr Findlay. During that meeting they went through the Crown invoice and identified the items in dispute that amounted to $1,754.50. The plaintiff deposed as to the following conversation:

SF:   Management have looked at these expenses and determined that they must be personal. I’ll need you to fill in a Payroll Repayment Request for those amounts.

GS:   I told you I was taking my family with me and I thought I had your approval, but if it is causing an issue I’ll fill in the forms to deduct it from my pay.

110. The plaintiff deposed that he did not consider that the disputed expenses had been incurred for his personal benefit but that he did not wish to leave on bad terms and accordingly he signed the forms for the amounts to be deducted from his salary.

111. The plaintiff described the 14 March 2018 meeting as tense and he described the questioning as aggressive. The meeting caught the plaintiff by surprise because he had no advance notice of it and he was directed to attend by Ms Buchanan. The plaintiff declined the opportunity to have a support person present, but I would afford that little weight for a number of reasons. Neither Ms Buchanan nor Ms McCarthy explained the purpose of having a support person present or that the meeting could be adjourned if the plaintiff wanted a particular person present. The Disciplinary Procedure also contained very little guidance on the support person procedure. There were very few people present in the office at the time of the meeting and the plaintiff’s former managers with whom he had long relationships had left TMCA by the date of the meeting. The plaintiff was told that he was required to keep what occurred in the meeting confidential and that it could not be shared with anyone. This was restated in Ms McCarthy’s letter dated 23 March 2018.

112. The plaintiff deposed that he told Ms Buchanan and Ms McCarthy that the Loft suite was the only available room offered to him by the Serko system, that his son ate the leftovers of his meal at the Common Man and that the use of the Telstra Dongle had previously been approved by his former managers.

113. The plaintiff’s affidavit evidence was inconsistent with two matters recorded by Ms McCarthy. First, that he did not tell his manager that he was bringing his family with him on the Melbourne trip. Second, that when he stayed in Melbourne on Friday 19 January 2018 that he did not think that was appropriate and that he normally would have flown home on the Friday afternoon.

114. As to the first of those matters, I find that the plaintiff’s evidence was probably reconstructed. I do not think that this finding is of any significance for two reasons. First, the plaintiff made no secret of the fact that he took his family to Melbourne with him and he even took his son into the office and Ms Buchanan spoke to them. Second, if he had told Mr Findlay that he intended to take his family with him, the evidence was that TMCA would have encouraged him to do so, on the unspoken understanding that the plaintiff would be expected to keep his business and personal expenses separate.

115. As to the second matter, I prefer the plaintiff’s evidence over what he said in the 14 March 2018 meeting, because he was put on the spot in the meeting and he answered by reference to a usual practice rather than by reference to the particular business trip.

116. In cross-examination the plaintiff gave evidence that his termination payment was received into his bank account about one month after he was terminated.

117. For a case based on dishonesty there was a serious deficiency in TMCA’s cross-examination of the plaintiff in that on the crucial aspects, it was not squarely put to the plaintiff that at the relevant time that he acted dishonestly or gave a dishonest answer. There were many occasions in the transcript where I raised this issue with TMCA’s counsel.

118. In cross-examination the plaintiff was asked about what was said to Ms Eather and Mr Findlay on 21 February 2018. The plaintiff accepted that when he told Ms Eather that he had no personal expenses in his expense claims that his answer was untruthful. I sought to clarify what those personal expenses were. The plaintiff clarified that they were the disputed expenses. The objective evidence demonstrates that the expenses were not in fact disputed by TMCA until about 1 March 2018. So at the time, when the plaintiff was asked the question on 21 February 2018 he could not have known that those expenses would be disputed and accordingly would be classified by TMCA as personal. This was a clear example of the plaintiff adopting the artificiality of TMCA’s binary classification of the expenses, when no binding decision had been made as to the appropriate classification of the expenses. Despite being told by me that the witness was not following the questioning and that if dishonesty was in issue and it needed to be squarely put, TMCA’s counsel did not return to the issue.

Credit

119. The plaintiff struck me as being a witness trying to do his best to tell the truth. He made a number of concessions against his own interest, on occasions too easily. Under pressure, the plaintiff seemed to agree with what was put to him rather than to stand up for himself. He was easily confused and for the most part returned to his version of events. This occurred on a number of occasions including for example during re-examination. I am satisfied that he performed similarly in the meetings that he had with Ms Buchanan and Ms McCarthy. On a number of occasions he did not stand up for himself in those meetings and stated his loyalty to TMCA and thanked the interviewers for treating him in an adverse manner. It appeared to me that he did not contemplate the possibility that he would not be believed or out of a misplaced sense of loyalty that he was prepared to accept whatever the managers of TMCA decided. I do not accept his evidence that he knew at the time of the meetings that his employment could be terminated. In my view, that evidence was reconstructed by reference to what occurred later.

120. The plaintiff’s misplaced sense of loyalty was also demonstrated in his dealings with Mr Findlay, which allowed his offer to pay the disputed expenses to be used against him. The plaintiff’s conversations with Mr Findlay up to that point had been conciliatory. He did not state forcefully enough in the meetings with Ms Buchanan and Ms McCarthy that his statements to Mr Findlay were a compromise position.

121. I am satisfied that the plaintiff did not present his best case in the meetings with Ms Buchanan and Ms McCarthy because he was put under pressure and he was taken by surprise by the allegations. I am satisfied that the atmosphere of the first meeting was hostile because Ms Buchanan had prejudged the plaintiff based on what she had been told by Mr Findlay before giving him an opportunity to explain and the fact that Ms McCarthy was prepared to accuse him of lying in the early stages of the meeting demonstrated that she held similar views.

122. I do not accept that the plaintiff was given an opportunity to fairly state his case or that it would have made any difference to the decision to summarily dismiss him. The support person procedure was not adequately explained to the plaintiff by TMCA in the relevant procedure or by Ms Buchanan and Ms McCarthy. Further, it was not capable of meaningful implementation by reason of the lack of personnel in the office at the time of the 14 March 2018 meeting. The plaintiff was also limited in his ability to investigate, gather information and to present his case as a result of the direction given to him not to discuss the matter with anyone. I do not accept by reason of what was said to him on 28 March 2018 that the plaintiff understood, nor was it was objectively conveyed, that he was being given a final opportunity to plead his case. I also do not accept, for reasons I will come to that anything that he said would have changed Ms Buchanan’s decision to summarily dismiss him.

123. The plaintiff was a person of good character and regularly put TMCA’s interests above his own. Prior to the investigation launched in about February 2018 he had never been the subject of any disciplinary action or suspicion relating to his expense claims.

Mr Langridge’s Evidence

124. Mr Langridge was TMCA’s Divisional Service Manager, National Service, a Level 1 position from 2011 until he was made redundant in December 2017. Mr Langridge first met the plaintiff as a TMCA employee in 2004.

125. When the plaintiff was employed in Bahrain, he reported to Mr Langridge but his immediate supervisor was in the Middle East. Mr Langridge spoke to the plaintiff weekly by telephone and he met with the plaintiff when he travelled to the Middle East. Mr Langridge found the plaintiff to be diligent, personable and to be highly regarded by TMCA’s staff in Bahrain. Mr Langridge considered the plaintiff’s travel schedule in that role to be extensive and found that it was not unusual for him to be behind with administrative tasks.

126. When the plaintiff returned to Australia in 2007 he maintained contact with Mr Langridge as he partially reported to Mr Langridge.

127. In 2011 when Mr Langridge was appointed to be the Divisional Service Manager, the plaintiff came within his reporting line. [7] The plaintiff, Mr Chellingworth and Mr Irwin all worked from TMCA’s Caringbah office, which Mr Langridge worked from on a few days each week. The positions of Mr Langridge, Mr Irwin and Mr Chellingworth were all made redundant at the same time and they finished work in the week before Christmas in 2017.

     7. Described at [20] above.

128. Mr Langridge deposed that he was “extremely surprised” by TMCA’s allegation that the plaintiff had been dishonest. He had always found the plaintiff to be a dedicated and loyal employee who approached his duties flexibly and carried them out faithfully and diligently. He described the plaintiff as a person who acted with honesty and integrity and often preferred TMCA’s interests to his own. Mr Langridge described the plaintiff as a “people person” with considerable product knowledge and he believed that made the plaintiff a very effective trainer of other employees.

129. Mr Langridge described the Concur system as requiring some skill and experience to use and in his experience a number of employees with frequent travel schedules fell behind in submitting their expenses.

130. The process required an employee to scan a supplier’s invoice and attach it to the expense report, with the employee selecting the appropriate TMCA department or departments to which the expense should be allocated and then submitting the expense report to the approving manager. It was not unusual for expenses to be approved by a manager and later rejected via an audit process and sent back to the employee for correction for resubmission. Frequent travellers often became frustrated by the rejection of supplier’s invoices because they did not contain adequate detail, which was not uncommon in Australia. The plaintiff was required to allocate expenses between a number of departments which involved the notification and acknowledgement of each before the expense report could be submitted through Concur.

1. the Accommodation Procedure by booking a suite;

2. the Travel Policy by failing to ensure that the Crown accommodation expenses were reasonable;

3. his contractual obligations to act in accordance with TMCA’s best interests and to avoid conflicts of interest. [10]

   10. It is fair to say that these obligations were also reflected in the Code of Ethics.

270. I am not satisfied that the plaintiff’s breach was a sufficiently serious breach of an intermediate term to justify termination of the contract because it did not deprive TMCA of substantially the whole of the benefit that it was entitled to under the contract. The contract was one of employment. It is a natural consequence of the employment relationship that an employee’s misconduct may cause financial loss to their employer. The quantum of the loss was relatively small. The plaintiff’s error did not alter his performance of the employment contract. The breach did not involve dishonesty. The conduct could not be repeated because the plaintiff’s corporate credit card had been cancelled and he was not required to travel as much. Further, there was no evidence that the conduct was repeated in the period of 19 January to 21 February 2018. The breach was adequately compensated by the payment of damages, which the plaintiff had already agreed to pay at the time the contract was purportedly terminated and in any event that TMCA had a contractual right to withhold from any amount payable to the plaintiff.

271. I am not satisfied on the balance of probabilities that TMCA has established serious misconduct on the basis of the allegations in ground 1.

Ground 2 -   Did the plaintiff book an extra night of hotel accommodation on 19 January 2018 for personal purposes?

272. At the time of making the first and second travel requests, the plaintiff was unsure at what time on Friday 19 January 2018 that he would finish work at Port Melbourne and that it was reasonable that he would need to leave the office at least three hours before the scheduled departure time of his flight back to Sydney. In those circumstances, there was a reasonable business purpose for him to stay in Melbourne on that night and that he would need to book accommodation to do so.

273. I accept the plaintiff’s evidence that he did not know when he was going to finish at work on 19 January 2018 and that he had previously stayed on the last night of a business trip on many occasions. I also accept the plaintiff’s evidence that it was reasonable to allow three hours between leaving the Port Melbourne office and the scheduled departure time of a flight back to Sydney. In other words, the plaintiff would have had to be sure that he could leave the office by 6.00pm on that day.

274. I accept the plaintiff’s evidence that his uncertainty as to his finishing time on Friday 19 January 2018 provided a legitimate business reason justifying a departure from Melbourne on Saturday 20 January 2018. The plaintiff’s intention to stay in Melbourne on 19 January 2018 was conveyed to Mr Findlay in the second travel request that was approved by Mr Findlay.

275. I accept the plaintiff’s evidence that he did not finish work on 19 January 2018 before 6.00pm and I find that would have made it impractical for him to have returned to Sydney on that night.

276. The Travel Authorisation and Arrangements Procedure stated that managers in the position of Mr Findlay “must review itineraries to ensure alignment with business purposes and the minimisation of time away (particularly overnight and weekends away)”. [11]

     11. Underlining in the Procedure.

277. I am satisfied that Mr Findlay’s approval of the trip included an approval for the plaintiff to stay in Melbourne on 19 January 2018 and that was an approval given by TMCA.

278. Ms Buchanan conceded in cross-examination that it might have been reasonable for the plaintiff to stay in Melbourne overnight on 19 January 2018.

279. I am satisfied that the plaintiff said in the 14 March 2018 meeting that it was inappropriate to stay in Melbourne on 19 January 2018 because he was put under pressure in the meeting and answered by reference to his usual practice rather than by reference to the particular trip. I am satisfied that he was also conscious of the fact that he had agreed to pay for the final night’s accommodation as a compromise and that he adopted TMCA’s binary classification of the expense, when the situation was more complicated than that.

280. I am not satisfied that the plaintiff acted dishonestly by reference to Ground 2. I am not satisfied that the plaintiff was in breach of any of the relevant policies and procedures or his contractual obligations. To the contrary I am satisfied that there was a legitimate business reason for the plaintiff to stay in Melbourne on 19 January 2018, that this was approved by Mr Findlay and that the plaintiff was entitled to reimbursement of the actual cost of the hotel room in accordance with the Accommodation Procedure, subject to my findings on Ground 1.

281. I am not satisfied on the balance of probabilities that TMCA has established serious misconduct on the basis of the allegations in ground 2.

Ground 3 -    Did the plaintiff pay for his son’s meal at the Common Man Restaurant using his corporate credit card?

282. The evidence relied on by TMCA to establish this ground was flimsy. In the 14 March 2018 meeting the plaintiff volunteered that there was one meal where he may have had his son with him. The alleged admission did not extend to paying for anything on his corporate credit card. Neither Ms Buchanan, nor Ms McCarthy saw fit to interrogate the plaintiff any further on this issue, yet they were quick to conclude that the plaintiff was dishonest on this issue.

283. Somehow, and in a way that is unclear from the evidence, the meal at the Common Man was identified as the offending occasion. It was referred to in the Investigation Summary and the letter dated 23 March 2018. It is apparent from these references that the content of the notes of the 14 March 2018 meeting were not a complete record of what was said.

284. The objective evidence does not support TMCA’s case that the plaintiff was in breach of the Expense Reimbursement Policy. The tax invoice for the meal served to the plaintiff on 19 January 2018 described the number of diners being served as one. It recorded the service of one meal and one beer. There was also evidence that the plaintiff paid for his family’s meal on his personal credit card at the cost of $50.50. From this I infer that the plaintiff did separate his personal expenditure from his business expenditure, for which he was entitled to incur as a business meal expense on his corporate credit card.

285. The plaintiff’s evidence that his son consumed some left over pizza of his meal is consistent with the objective evidence. I accept the plaintiff’s evidence on this point and generally for the reasons already given.

286. A further alternative basis for finding against TMCA on ground 3 is that Ms Buchanan accepted in cross-examination that there was no additional expenditure incurred by TMCA to benefit the plaintiff’s son. She contended that the issue with the Common Man expense claim was that it was incurred on 19 January 2018 at a time when the plaintiff should have returned home. On this contention, it follows from my finding on Ground 2 that there was a legitimate business reason for the plaintiff to stay in Melbourne on 19 January 2018 that the Common Man expense claim was a legitimate business meal expense.

287. I am not satisfied that the plaintiff was in breach of any of the relevant policies and procedures or his contractual obligations. To the contrary I am satisfied that the plaintiff was entitled to claim the Common Man expense as a business meal expense under the Business Meal and Other Expenses Procedure.

288. I am not satisfied on the balance of probabilities that TMCA has established serious misconduct on the basis of the allegations in ground 3.

Ground 4 -   Did the plaintiff use his corporate credit card to purchase credit on the Telstra Dongle service for personal use, without TMCA’s knowledge or authority?

289. The only evidence was that the Telstra Dongle was used by the plaintiff to access the internet for the purpose of presenting training to TMCA employees and others during the course of his employment. Mr Langridge had approved the payment of the charges incurred by the plaintiff using the Telstra Dongle following a request made to him by Mr Irwin and Mr Chellingworth, in accordance with the Expense Reimbursement Policy.

290. After that approval was given, the plaintiff submitted a number of expense claims related to the use of the Telstra Dongle that were approved for payment by Mr Chellingworth. The plaintiff was entitled to claim the sum of $180 in reimbursement for the cost of using the Telstra Dongle for TMCA’s business purposes, in accordance with the Expense Reimbursement Policy.

291. TMCA did not make any competent inquiries of the plaintiff’s former managers, which would have corroborated his version of events.

292. TMCA’s case was based wholly on assertions that remain unsubstantiated.

293. I am not satisfied that the plaintiff was in breach of any of the relevant policies and procedures or his contractual obligations. To the contrary, I am satisfied that the plaintiff was entitled to claim reimbursement of the Telstra Dongle expense because he had obtained an authorisation from Mr Langridge under the Expense Reimbursement Policy and that authorisation had not been revoked.

294. I am not satisfied on the balance of probabilities that TMCA has established serious misconduct on the basis of the allegations in ground 4.

Ground 5 -   Was the plaintiff dishonest when asked about these expenses?

295. For the reasons given I have concluded that the plaintiff did not act dishonestly, but Ground 5 is based on the premise that the plaintiff gave dishonest answers in the course of the TMCA investigation.

296. TMCA submitted that Ground 5 was “based on Mr Sherry’s denial that he had incurred any personal expenses when asked during his Skype interview with Mr Findlay and Ms Eather”.

297. TMCA’s approach to this issue was based on its binary classification of expenses as personal or business expenses. The expenses that the plaintiff accepted were personal after they were rejected by TMCA were expenses that he maintained were business related. In other words, the subject expenses were disputed and it was reasonably open to the plaintiff to hold the view at the time that it was expressed that he had not incurred any personal expenses on the corporate credit card.

298. The plaintiff had not been told before the Skype meeting on 21 February 2018 that there was a problem with the acceptance of any of his expenses. I do not accept Mr Findlay’s evidence that he was told that there was a problem on 21 February 2018, following the Skype meeting.

299. On 14 March 2018 and perhaps later as well, the plaintiff was lured into TMCA’s binary classification without representing himself strongly enough as to the disputed expenses. I do not consider his references to the disputed expenses being personal expenses on that day to be determinative of the issue.

300. For the reasons given, the plaintiff was correct in maintaining that the accommodation cost on 19 January 2018, the Common Man expense and the Telstra Dongle were not personal expenses.

301. In relation to the Crown accommodation expenses, the true position was that the plaintiff maintained that he did the right thing but accepted with the benefit of hindsight that he could have done more. The plaintiff had reasonable grounds for believing that he could not have fixed the problem in compliance with TMCA’s policies and procedures.

302. TMCA has failed to prove that the plaintiff had no reasonable belief that what he said to Ms Eather and Mr Findlay on 21 February 2018 was true.

303. I am not satisfied that the plaintiff gave dishonest answers to TMCA in the course of the investigation.

Conclusion on Issue 1

304. I am not satisfied on the balance of probabilities that the plaintiff engaged in serious misconduct as defined in the written agreement or at common law to justify the plaintiff’s summary dismissal.

Issue 2 -    What are the appropriate damages to be awarded to the plaintiff?

305. TMCA represented to the plaintiff that he was entitled to a redundancy payment of $379.268.10 gross ($290,359.10 net) if he continued to remain in its employment until 31 March 2018. It is beyond doubt that TMCA retained the right to summarily dismiss him if it had appropriate grounds to do so.

306. The plaintiff was purportedly summarily dismissed on 28 March 2018. TMCA admitted in its Defence that the plaintiff’s last day of work before the End Date would have been 29 March 2018.

307. The plaintiff submitted that his position was being made redundant on 31 March 2018 and that if the contract had not been wrongfully terminated that he would have still been employed by TMCA on the End Date. The redundancy clause obliged TMCA to make a redundancy payment if the plaintiff’s position became redundant and if TMCA could not offer him a suitable alternative position. It was common ground that the plaintiff’s position became redundant and that TMCA did not offer him a suitable alternative position. The redundancy clause obliged TMCA to make a redundancy payment in an amount according with the applicable industrial legislation or such higher amount as it otherwise decided. TMCA decided to pay the plaintiff more than his legislative entitlements in or about July 2017. TMCA was not contractually obliged to pay the larger sum, but it did not indicate at any time that it would do otherwise.

308. The plaintiff submitted that if the contract had not been wrongfully terminated then the plaintiff would have only had to work one more day to be paid what TMCA had told him he was entitled to. The plaintiff contended that these arrangements were almost certain.

309. TMCA contended that if the Court was satisfied that the plaintiff had engaged in misconduct, but not serious misconduct to justify summary dismissal, then it would have relied on the notice clause and paid the plaintiff out his notice period on 28 March 2018, thereby terminating the contract on that day and avoiding any obligation to make a redundancy payment.

310. TMCA correctly submitted that it was not contractually obliged to pay the larger sum. It retained a discretion to pay the plaintiff his legislative entitlements or another amount in between.

311. The plaintiff bore the onus of establishing on the balance of probabilities as to what would have been the value of the contract, if it had not been terminated: Gates v City Mutual Life Assurance Society Ltd (1986) 160 CLR 1 at 7 (Gibbs CJ) and 15 (Mason, Wilson and Dawson JJ). The value is to be determined objectively and therefore takes into account the possibility that other events may make the lost contractual rights less valuable: The Mihalis Angleos, The Golden Victory and Bunge SA v Nidera BV.

312. However, the mere existence of a wrongdoer’s right to terminate the contract does not mean that the contract operates automatically to restrict the damages that can be awarded: Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 91-93 (Mason CJ and Dawson), 133-115 (Brennan J), 132-133 (Deane J), 143-144 (Toohey J) and 149-150 (Gaudron J), TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 10 at 154 (Hope JA, Priestley and Meagher JJA agreeing) and Berry v CCL Secure Pty Ltd [2020] HCA 27 at [37] (Bell, Keane and Nettle JJ) and [69] (Gageler and Edelman JJ).

313. The question is whether absent the wrongful termination, would the wrongdoer would have terminated the contract? To decide that requires the court to have regard to all the facts and circumstances of the case, including events extraneous to the contract that were in the control of the wrongdoer: Berry at [38]. The Court is not obliged to assess damages by reference to an improbable factual hypothesis: TCN Channel 9 and Amann Aviation.

314. Whilst the burden of proof in the sense of the ultimate burden of establishing his case on the balance of probabilities remained with the plaintiff, the burden of proof in the sense of introducing evidence was liable to shift constantly “according as one scale of evidence or the other preponderates”: Purkess v Crittenden (1965) 114 CLR 164 at 168 (Barwick CJ, Kitto and Taylor JJ).

315. I have concluded that TMCA did not have the right to summarily dismiss the plaintiff. The mere existence of the notice clause is insufficient to displace the inference that the contract of employment would have continued in existence until the End Date, bearing in mind that involved only one more work day. The practical burden of introducing evidence to show that on the balance of probabilities that the employment contract would have been terminated by TMCA relying on the notice clause, fell to TMCA.

316. TMCA did not plead that if the Court decided that it did not have the right to terminate the employment contract that it would have relied on the notice clause. In effect, TMCA pleaded an all or nothing case by maintaining in the Defence that it was entitled to summarily dismiss the plaintiff for serious misconduct.

317. The function of pleadings is to state with sufficient clarity the case that must be met and thereby to ensure the basic requirement of procedural fairness that a party should have the opportunity to meet all of the material facts against them and to have the issues for decision defined: Banque Commerciale SA (En liq) v Ankil Holdings Ltd (1990) 169 CLR 279 at 286.

318. TMCA was required to plead the counterfactual on which it intended to rely to deny the causal link between TMCA’s repudiation of the employment contract and the loss sought by the plaintiff: Berry at [72]. It cannot be assumed that in the absence of any pleaded counterfactual that TMCA would have pleaded the counterfactual that it has contended for in final submissions at [309]. In the absence of the pleaded counterfactual, the Court is not required to make a factual finding on the issue as to a counterfactual and it would be procedurally unfair to the plaintiff to do so.

319. The absence of the counterfactual in the pleading also denied the plaintiff the opportunity to plead relevant matters in its Reply. In this case, it was open to the plaintiff to argue that TMCA was estopped from relying on the notice clause by reference to its representations relating to the plaintiff’s position becoming redundant. The plaintiff put on a Reply, which did not raise an estoppel because it was not necessary to do so, based on TMCA’s pleaded defence.

320. TMCA led no evidence of the counterfactual it contended for in [309].

321. TMCA seeks to rely on the hypothetical that it did not call any evidence about. The result is that the plaintiff was not given the opportunity to challenge the hypothetical in cross-examination in circumstances where I have largely rejected the evidence of its witnesses.

322. There is no basis for assuming the counterfactual and the consideration of it is not permitted by the issues defined in the pleadings. Accordingly, TMCA cannot contend that it would have relied on the notice clause to terminate the employment contract prior to 31 March 2018, thereby avoiding the obligation to make a redundancy payment.

323. If I am wrong that the TMCA was required to plead the counterfactual and to lead evidence of it, I would not infer that TMCA would have made the necessary payment in lieu of notice in time to terminate the employment contract before the End Date, because its purported payment in lieu of notice referred to in the Termination Letter was not made for about one month after the plaintiff’s termination. At the time, TMCA had legal advice and acted on it. I infer that TMCA had not been advised that if it wanted to rely on a payment in lieu of notice that making of the payment was necessary to bring the employment contract to an end.

305. In a case of termination of a contract of employment for wrongful dismissal, at common law the employee is prima facie entitled to recover the present value of wages which would have been earned for the remaining period of the contract: Tasman Capital Pty Ltd v Sinclair (2008) 75 NSWLR 1 at [64] and [70].

306. It was common ground that the remaining period of the contract was until 31 March 2018, which required the plaintiff to attend for work on 29 March 2018 only. TMCA had represented up and until 28 March 2018 that the plaintiff’s redundancy payment would be in the sum stated in the 31 July 2017 letter.

307. TMCA did not plead any counterfactual to the effect that it would have decided to exercise its discretion to pay the plaintiff less than the redundancy payment it had previously advised. Again this deprived the plaintiff of the opportunity to plead in its Reply any relevant counter argument.

308. TMCA did not lead any evidence on this issue.

309. Generally speaking where there are several ways in which a contract may be performed the mode to be adopted in assessing he value of a contract is the least profitable way to the plaintiff or the least burdensome way to the defendant: Cockburn v Alexander (1848) 6 CB 791 at 814 (Maule J). Another way of saying this is that a defendant is not liable for doing that which he is not bound to do: Lavarack v Woods of Colchester Ltd [1967] 1 QB 278. But this is subject to the proviso stated by Lord Diplock at 295-6 and cited with approval by the High Court in Berry at [38] :

The events extraneous to the contract, upon the occurrence of which the legal obligations of the defendant to the plaintiff thereunder are dependent, may include events which are within the control of the defendant: for instance, his continuing to carry on business even though he has not assumed by his contract a direct legal obligation to do so. Where this is so, one must not assume that he will cut off his nose to spite his face and so control these events as to reduce his legal obligations to the plaintiff by incurring greater loss in other respects. That would not be the mode of performing the contract which is “the least burdensome to the defendant”.

329. Without evidence from TMCA that it would have decided to pay the plaintiff only his legislative entitlements on redundancy, I am not satisfied that I should make that assumption because that could have caused significant problems for TMCA in application of the Redundancy Procedure to its employees in the future.

Mitigation of damages

330. TMCA finally contended that the plaintiff was required to take steps to mitigate his loss and that he provided no evidence that he had done so. I do not accept that the plaintiff has failed to mitigate his loss for the reasons that follow.

331. In assessing damages for wrongful dismissal, there must be brought to account the financial benefit which the employee received, or acting reasonably should have received, from the exercise of earning capacity freed up by the dismissal: Bagnall v National Tobacco Corporation of Australia Ltd (1934) 34 SR(NSW) 51 and Lavarock. For example, in the case of wrongful termination by a failure to give the required notice provided for by the contract, the employee is freed up for the period of notice required to be given under the contract, but not given: Bagnall.

332. In the unusual circumstances of this case, the plaintiff was not bound to work for TMCA after 31 March 2018, because he had been told by TMCA that his position would become redundant on that day. I infer from the evidence that the plaintiff’s position did become redundant on that date and that Mr Kerr assumed his role in Melbourne from that time. The effect of the wrongful dismissal was to free the plaintiff up to find other alternative employment for one day, being 29 March 2018 only, because 30-31 March 2018 were not work days.

333. The plaintiff’s evidence was that he did not seek other employment until August 2018 and that he did not earn any income in that period.

334. For the reasons given, I am satisfied that but for the wrongful termination of the employment contract by TMCA, the plaintiff would have continued to work until the End Date, that his position became redundant on that day, that he had not been offered suitable alternate employment and that TMCA was contractually obliged to provide redundancy payments in the amount that it represented that it would.

335. The onus of proving that the plaintiff could have or did earn or should have earned in the relevant period was on TMCA: Tasman Capital.

336. TMCA did not lead any evidence on this point.

337. In the circumstances of this case, it is absurd to suggest that TMCA could have proved that the plaintiff failed to mitigate his loss by not taking any steps to exercise his earning capacity in the period 29-31 March 2018.

Assessment of damages

338. It is appropriate that the so called “ex gratia” payment made to the plaintiff by TMCA should be taken into account. This was accepted by the plaintiff in the Statement of Claim, but became the source of controversy by reference to TMCA’s characterisation of the payment. In my view, the “ex gratia” payment should be taken into account in assessing damages to avoid double compensation.

339. The plaintiff must also account for the amounts he agreed to repay TMCA relating to the Crown accommodation expenses. For the reasons given, he was in breach of the relevant policies for which the appropriate remedy is damages in the sum that he has already paid to TMCA. The amount of the repayment in relation to the extra night should be reduced because I have found that there was a legitimate business reason for the plaintiff to stay in Melbourne on 19 January 2018. I do not have the necessary information to calculate the appropriate reduction. In the outcome of the proceedings, it does not matter much and it is appropriate to take a broad brush approach and to not to complicate the case any further.

340. TMCA must account to the plaintiff for the Common Man expense and the Telstra Dongle expense in the total sum of $212.50, which I have found that he was justified in claiming.

341. The parties did not make any submissions about whether the judgment sum was to be on gross or nett figures. From my research it appears that the award of damages to the plaintiff would qualify as an eligible termination payment, that special taxation provisions apply and it is appropriate to award damages on the gross figures. In case I am wrong on this point, I will grant the parties liberty to apply.

342. The plaintiff is entitled to an order for damages for TMCA’s repudiation of the employment contract in the sum of $298,958.70 being the difference between the gross figures set out in [3] and [4] above, with the addition of $212.50 referred to in [340] above.

343. The plaintiff is also entitled to interest on the nett amount of the loss from 29 March 2018 to 23 December 2020 at the rate of 5.5% from 29 March 2018 to 31 December 2019 (1,009 days) and 4.75% from 1 January 2020 to 23 December 2020 (358 days).

Orders

344. I make the following orders.

1. Verdict for the plaintiff in the sum of $298,958.70, plus interest pursuant to s 100 Civil Procedure Act 2005 to be calculated by the parties, in accordance with these reasons.

2. I direct the parties bring in Short Minutes of Order by providing them to my Associate relating to the interest calculation on or before 5pm on 22 January 2021.

3. On receipt of the Short Minutes of Order, I will amend the judgment sum in chambers and provide a sealed copy of the orders to the parties on the day they are made.

4. The defendant is to pay the plaintiff’s costs of the proceedings as agreed or assessed, on the ordinary basis.

Addendum

345. As a result of further agreement between the parties, I set aside the orders made on 23 December 2020 and in lieu thereof make the following orders:

1. Verdict for the plaintiff in the sum of $276,681.00.

2. The defendant is to pay the plaintiff’s costs of the proceedings on the ordinary basis up to and including 23 July 2019 and thereafter on the indemnity basis, as agreed or assessed.

3. Exhibits to be returned.

4. The Court notes:

1. the judgment sum is calculated as $298,958.70 less tax of $56,908.00, plus interest of $34,630.60 pursuant to s 100 Civil Procedure Act 2005 calculated on the net sum of $242,050.70;

2. the PAYG summary issued by the defendant to the plaintiff in April 2018 following his termination of employment requires correction and the defendant will, as soon as practicable:

1. issue an amended PAYG payment summary and a termination payment summary characterising the payments as a bona fide redundancy;

2. provide those summaries to the plaintiff and the Australian Taxation Office.

Sherry Appendix A (236514, pdf)

Endnotes

Amendments

03 February 2021 - Addendum added 2 February 2021.

Appendix A included 3 February 2021.

04 February 2021 - Last sentence of [4] was changed to read: On the day he was terminated the plaintiff was informed he would be paid a termination payment in the sum of $80,521.90 gross ($49,621.40 net).

Decision last updated: 04 February 2021