Sutton v Be Australia WD Pty Ltd (No 4)

[2017] NSWSC 1123

Supreme Court

New South Wales

Medium Neutral Citation:

Sutton v BE Australia WD Pty Ltd (No 4) [2017] NSWSC 1123

Hearing dates:

25 November 2016; 9 and 27 February 2017; 29 June 2017 (further written submissions)

Date of orders:

24 August 2017

Decision date:

24 August 2017

Jurisdiction:

Common Law

Before:

Walton J

Decision:

The Court makes the following orders and directions all of which shall require compliance within 21 days of the publication of this judgment:

 

(1) The plaintiff shall file in the form of short minutes of order or a schedule reflecting the following:

 

(a) The quantification of compensation payable by the first defendant under the termination and bullying and harassment grounds in accordance with the terms of this judgment;

 

(b) The application of interest to that amount in accordance with the determination as to the approach to interest set out under the corresponding heading of this judgment;

 

(2) The plaintiff has liberty to file any final submissions as to the implications of the settlement with the second defendant. Those submissions shall be limited to the question of any deduction arising from the settlement with the second defendant and may address the issue of apportionment between the first the second defendants (after the deduction of costs referrable to the proceedings against the second defendant).

 (3) The plaintiff shall file any application as to costs against the first defendant and any submissions in support thereof.

Catchwords:

UNFAIR CONTRACT – ex parte proceedings – claim for money orders – notice – humiliation, stress and reputation damage – interest – implications of settlement with co-defendant – directions

Legislation Cited:

Trade Practices Act 1974 (Cth)
Industrial Relations Act 1996 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Brown v State of New South Wales (Department of Education and Communities) [2013] NSWIRComm 115
King v State Bank of New South Wales (No 2) (2002) 126 IR 407; [2002] NSWIRComm 353
King v State Bank of New South Wales [2000] NSWIRComm 229
State of New South Wales v Banas (2004) 137 IR 63; [2004] NSWIRComm 255
Walker v Citigroup Global Markets Australia Pty Limited (2006) 233 ALR 697; [2006] FCAFC 101
Westfield Holdings v Adams (2001) 114 IR 241; [2001] NSWIRComm 293

Category:

Costs

Parties:

Mary Sutton (plaintiff)
BE Australia WD Pty Ltd (first defendant)

Representation:

Counsel:
M Gibian (plaintiff) (ex parte)

  Solicitors:
Gilbert + Tobin (plaintiff)

File Number(s):

2016/26450

Judgment

1. HIS HONOUR: By a second further amended summons Mary Sutton (“the plaintiff”) sought declaratory relief and monetary payments, pursuant to s 106(1) and (5) of the Industrial Relations Act 1996 (NSW) (hereafter referred to as “the Act”), against BE Australia WD Pty Ltd (“the first defendant”) and Phillip James Davidson (“the second defendant”) regarding work performed by the plaintiff for the first defendant. The proceedings against the second defendant were dismissed upon the basis of consent orders, without admission of liability, for the payment of a sum of $350,000 inclusive of costs.

2. The balance of the matter concerning the first defendant proceeded before the Court, ex parte.

RELIEF SOUGHT

3. The plaintiff sought the following relief:

1. An order declaring void (except for monies already paid) the arrangement between the plaintiff and the first defendant whereby [the plaintiff] performed work in the taxation consulting industry for [the first defendant] (“the contract”).

2. An order declaring that the contract or arrangement was unfair, harsh or unconscionable or against the public interest.

3. An order that the contract be varied from its commencement in the terms set out in Schedule A.

4. An order that [the first defendant] pay [the plaintiff] such sum of money in connection with the contract or arrangement as the Court considers just in the circumstances of the case.

5. An order that the [first defendant] pay [the plaintiff’s] interest on the sums of money ordered to be paid by the Court, from 7 October 2005 being the date of the termination of the contract at the rates set by the Uniform Civil Procedure Rules 2005 (NSW).

6. An order that the [first defendant] pay the costs of the proceedings.

4. Schedule A to the second further amended summons was in the following terms:

1. The [first defendant] and [second defendant] will not conduct themselves in a manner which:

1. Is contrary to the legitimate expectations and understandings of the [plaintiff] particularly in circumstances where any such actions of the first and [second defendant] have the potential to, or do in actual fact, damage or detrimentally impact on the terms and conditions whereby the [plaintiff] performed work for the [first defendant];

2. Is contrary to the representations made to the [plaintiff];

3. Is likely to, or does in fact, cause the [plaintiff] to suffer distress and/or anxiety, humiliation and/or damage to her good name and character.

2. The [first defendant] shall not terminate the contract without a proper reason and without providing the [plaintiff] procedural fairness, including informing the [plaintiff] of the precise nature of the allegations made against her and providing her an opportunity to answer those allegations and to be heard before a decision is made in relation to the termination of the contract.

3. The [first defendant] will take all reasonable steps to prevent any of its employees or agents from bullying and or harassing the [plaintiff].

4. The [first defendant] may only terminate the arrangement by giving the [plaintiff] 15 months' notice in writing or payment in lieu thereof.

5. For the purpose of (4), above, payment in lieu of notice shall be calculated by reference to the payments made to the [plaintiff] whilst performing work for the [first defendant] and based on her average hours per week.

6. The exercise of any discretion permitted under the contract shall be exercised by the [first defendant] towards the [plaintiff] in a manner that is at all times fair, just and conscionable, and in this regard the Respondent will afford to the [plaintiff] natural justice and procedural fairness.

7. The [first defendant] shall investigate any allegations made by the [plaintiff] concerning the conduct of the [defendants].

8. The [first defendant] will inform the [plaintiff] of its findings of any complaint made by the [plaintiff] concerning the conduct of the [defendants].

9. The [defendants] following the termination of the contract shall not alone or with others disparage the [plaintiff] and/or undermine her prospects of future employment and/or employment.

5. The relief claimed in the second further summons for relief was as follows:

1. Fifteen months’ pay in lieu of notice $175,000

2. $220,000 as compensation for stress suffered by the [plaintiff] as a result of omission from the arrangement of a term requiring the [first defendant] take all reasonable steps to prevent any of its employees or agents from bullying and/or harassing the [plaintiff].

3. $20,000 in compensation for failing to abide by the representations made to the [plaintiff] about becoming an employee of the [first defendant].

4. $40,000 in compensation for disparaging the [plaintiff] and/or undermining her prospects of future employment and/or employment.

5. Plus interest and costs.

THE JUDGMENT IN SUTTON NO 3

6. On 1 June 2017 the Court delivered judgment with respect to the second further amended summons: Sutton v BE Australia WD Pty Ltd (No 3) [2017] NSWSC 689 (“Sutton No 3”).

Merit

7. In Sutton No 3 the Court identified that the plaintiff had relied upon the following grounds of unfairness (at [94]):

[94] The grounds of unfairness may be summarised under three broad categories:

(1) Termination

The grounds essentially consisted of the following:

(a) the arrangement resulted in the plaintiff being in a position of unequal and inferior bargaining power such that the plaintiff had no protection from arbitrary and immediate termination of her engagement at any time and without reason;

(b) the arrangement permitted for the termination of the plaintiff’s services essentially without any notice and failed to ensure a reasonable period of notice of payment in lieu of notice upon termination of the arrangement; and

(c) the arrangement permitted the first defendant to terminate the arrangement without proper reason, without providing any form of procedural fairness and in a manner that was likely to and did cause the plaintiff to suffer hurt, distress and humiliation.

(2) Bullying and Harassment

The ground consisted of:

(a) the arrangement failed to contain any reasonable provisions to protect the plaintiff from bullying and harassment or to ensure the appropriate and timely resolution of any complaint or grievance that the plaintiff might have occasion to raise in the course of her work; and

(3) Disparagement

The ground consisted of:

(a) the arrangement failed to include any provision to protect the plaintiff from future disparagement and from conduct that was likely to and did undermine her prospects of securing future employment and successfully continuing her career.

8. As the first ground of unfairness the Court made the following findings (at [101]-[103]):

[101] In these circumstances, I am satisfied that the arrangement constituted an unfair contract pursuant to s 105(1) of the Act. The obligation upon the first defendant to ensure that adequate protective provisions were in place in relation to termination was not diminished by the plaintiff’s status as a contractor or engagement under labour hire type arrangements: see, for example, AHI Healthcare Systems v Clinical Associates of Australia [2001] NSWIRComm 38 at [230]. (Nor did her engagement through RJ Group diminish that obligation). I do not consider the arrangement was “temporary” as pleaded at the time by the first defendant. The plaintiff was working in a very senior position and used specialist skills. The first agreement applied to both temporary engagements and contractors, the plaintiff falling under the latter category. It is clear on the evidence the plaintiff was not engaged merely as a replacement during Ms Mora’s leave, because her engagement continued unabated upon Ms Mora’s return. Clear representations were made about her role being ongoing (which were primarily interrupted due to the unreasonable conduct of the second defendant and in the absence of a proper response by the first defendant). The RJ Group, Link and the first defendant formed part of a contractual matrix by which the plaintiff performed work for the first defendant in a senior capacity akin to a full-time employee at an Associate Director level.

[102] The arrangement, established by the first and second agreements, failed to provide any adequate protection against arbitrary termination (see, Lavings v Barclay Mowlem Construction (NSW) Ltd (1994) 99 IR 247 at 253-254) and provided for a period of notice which, as the contract was performed over time, was unfair.

[103] Overall, I find that by virtue of the factors discussed under this heading that the contract constituted an unfair contract for the purposes of s 105(1)(a) of the Act and, in particular, I find the contract was unfair and harsh.

9. As to the second ground relating to bullying and harassment the Court made the following findings (at [104], [110]-[112]):

[104] I also accept the submission of the plaintiff that the unfairness of the arrangement was further exacerbated by the failure of the arrangement to make any provision to adequately protect the plaintiff from bullying or harassment or the resultant distress and harm. Further, the first defendant failed to provide for any appropriate mechanism for the investigation of complaints or protection from retribution.

…

[110] I agree with the submissions advanced by the plaintiff that the evidence in the proceedings supports the inference that the plaintiff’s engagement with the first defendant was terminated as a result of her complaints about the second defendant’s conduct in his dealings with her and Ms Mora. This supports the conclusion that the termination was based upon an unfair contract in the sense that the contract was unfair and harsh.

[111] The arrangement failed to contain adequate protective provisions to protect the plaintiff from bullying and harassment or to ensure adequate action was taken in the event the plaintiff had occasion to make a complaint or grievance particularly issues concerning the propriety of the second defendant professional conduct in the first defendant. The arrangement further became unfair because of the conduct of the first defendant in failing to address the behaviour of the second defendant or protect the plaintiff from its consequence.

[112] In respect of the ground of bullying and harassment, I conclude that the arrangement was unfair and harsh pursuant to s 105(1)(a) of the Act and, in particular, I find the contract was unfair and harsh.

10. The Court rejected the third ground concerning disparagement.

Declarations

11. The Court considered it appropriate to make declarations and directed the [plaintiff] to bring in short minutes of order of the declarations consistent with the Court’s judgment.

12. On 22 June 2017 the Court made the following declarations:

1. Declares void (except for monies already paid) the arrangement between the Plaintiff and the Defendant whereby the Plaintiff performed work in the taxation consultancy industry for the Defendant ("the contract").

2. Declares that the contract was unfair and harsh.

3. Orders that the contract be varied from its commencement in the terms set out in Schedule A.

SCHEDULE A

1. The First Defendant and Second Defendant will not conduct themselves in a manner which:

(a) is contrary to the legitimate expectations and understandings of the Plaintiff particularly in circumstances where any such actions of the First and Second Defendant have the potential to, or do in actual fact, damage or detrimentally impact on the terms and conditions whereby the Plaintiff performed work for the First Defendant;

(b) is contrary to the representations made to the Plaintiff;

(c) is likely to, or does in fact, cause the Plaintiff to suffer distress and/or anxiety, humiliation and/or damage to her good name and character.

2. The First Defendant shall not terminate the contract without a proper reason and without providing the Plaintiff procedural fairness, including informing the Plaintiff of the precise nature of the allegations made against her and providing her an opportunity to answer those allegations and to be heard before a decision is made in relation to the termination of the contract.

3. The First Defendant will take all reasonable steps to prevent any of its employees or agents from bullying and/or harassing the Plaintiff.

4. The exercise of any discretion permitted under the contract shall be exercised by the First Defendant towards the Plaintiff in a manner that is at all times fair, just and conscionable, and in this regard the Defendant will afford to the Plaintiff natural justice and procedural fairness.

5. The First Defendant shall investigate any allegations made by the Plaintiff concerning the conduct of the Defendants.

6. The First Defendant will inform the Plaintiff of its findings of any complaint made by the Plaintiff concerning the conduct of the Defendants.

Money Orders: Relevant Findings

13. The Court made the following observations in Sutton No 3 as to the broad discretion in it under s 106 of the Act as follows (at [124]):

[124] The Court has a broad discretion under s 106(5) of the Act to make such orders as to the payment of money as the Court considers just in the circumstances of the case. The power extends to such orders as can reasonably be thought to have a real connection with the making, variation or avoidance of the contract or arrangement: Brown v Rezitis at 165; Fish v Solution 6 Holdings Ltd (2006) 225 CLR 180 at 191[25]. The exercise of power clearly involves the exercise of a very broad judgment in assessing a just monetary amount not limited to defined heads of loss or damage: Barclays Australia InvestmentServices Ltd v Nordby (1995) 99 IR 258 at 279. The Court is not confined to apply common law or equitable principles for assessing damages but those principles (see, Westfield Holdings Pty Ltd v Adams (2001) 114 IR 241; [2001] NSWIRComm 293 (“Westfield Holdings”) at [161]) may nonetheless be instrumental in determining the quantum of a money order pursuant to s 106(5): Westfield Holdings at [130]. In making a money order I must do what is just in the circumstances of a particular case: Westfield Holdings at [102].

14. The plaintiff sought that the Court make an order for the payment of money in connection with the arrangement that took account of the following:

1. The failure of the arrangement to contain any reasonable provision with respect to notice of termination or payment in lieu thereof and the consequences of the failure to protect the plaintiff from arbitrary and immediate termination on her future employment and career.

2. The stress and humiliation suffered by the plaintiff as a result of being exposed to bullying and harassment at the hands of the second defendant and the failure of the arrangement to include any adequate provision to protect her from such conduct.

3. The impact upon the plaintiff’s career and earnings resulting from the failure of the arrangement to protect her from conduct of the first defendant which disparaged her and undermined her future employment prospects.

15. The Court then turned to deal with issues (1) and (2) given the plaintiff had failed to demonstrate the contract or arrangement was unfair, harsh or unconscionable or against the public interest with respect to the disparagement ground.

Termination of Employment

16. The preliminary conclusion of the Court with respect to the money orders sought in relation to the termination of employment ground was as follows (at [132]):

[132] The determination of money orders will require an evaluation of all relevant factors contributing to that assessment. Clauses 4 and 5 in Schedule A (see para [4] above) should provide for a period of notice or payment in lieu thereof. However, the specification of any such period of notice and any quantification thereof should await the overall determination of any money orders. That assessment will be made after the receipt of any evidence and submissions filed concerning the settlement reached with the second defendant in accordance with direction which will be made below.

17. As the Court will return to the assessment of money orders, in that respect, after referring to some further submissions filed by the plaintiff pursuant to directions of the Court; it is convenient here to record the factors considered relevant to be taken into account in the assessment of money orders under this heading. Those considerations were as follows (at [127]-[131]):

[127] The amount claimed in the further amended statement of claim was calculated on the basis of a 15 month period of the earnings actually received by the plaintiff in respect of her work for the first defendant. The evidence demonstrated that the plaintiff received a daily payment through the contract which resulted in total remuneration of $174,323. It was submitted that figure provides an appropriate basis for calculating the plaintiff’s loss of earnings.

[128] It was submitted the unfairness in the arrangement, whereby she performed work, and the conduct it permitted on the part of the first defendant caused immediate and substantial loss to the plaintiff. It was contended this had an enduring and devastating effect upon the plaintiff’s career and earning potential. It was further contended a substantial payment ought to be ordered having regard to the ongoing loss of earnings experienced by the plaintiff for reasons including the following:

(1) Despite her efforts to obtain other employment, the plaintiff did not obtain any further work between October 2005 and May 2006 when she took up a short term position with IBM and was then again unable to obtain alternative employment until commencing with SIMS in November 2008.

(2) The termination of the plaintiff’s engagement occurred notwithstanding repeated and clear representations made by Mr Cochran and others during 2005 that the plaintiff would be employed in a permanent and ongoing position by the first defendant.

(3) To the knowledge of the first defendant, the plaintiff did not pursue opportunities to obtain other employment, including a tax role with United Group, as a result of representations made to her in relation to her ongoing engagement with the company.

(4) The fact of the plaintiff’s immediate and unexplained termination cast a pall over her reputation and ongoing employment prospects. The events which took place in relation to her engagement with the first defendant have destroyed her otherwise successful career.

[129] These contentions may be accepted on the evidence in these proceedings.

[130] In this context, it was submitted that the Court was not strictly limited to common law notions of reasonable notice of termination: Westfield Holdings at [161]. The Court may have regard to the fact that the consequences of the unfairness evident in the arrangement whereby the plaintiff performed work have had enduring consequences for her beyond the immediate period following the termination. Again this submission may be accepted in the broad but I do not consider that Westfield Holdings is authority for a proposition that factors relevant to the assessment of reasonable notice may be put out of account in determining appropriate money orders. Those common law principles offer a guidepost as to what may constitute an appropriate period of notice of termination or payment in lieu thereof in considering whether a contract is unfair for the purposes of s 106. Further, those principles may also inform the assessment of the quantum of money orders that should be properly made upon the finding of the existence of an unfair contract.

[131] Bearing in mind those considerations, the following additional factors are relevant to the assessment of money orders (even if, strictly speaking, the engagement of the plaintiff was not as an employee):

(1) The plaintiff had a high grade of appointment which was important. The plaintiff worked with the Asia-Pacific region (principally in Australia and New Zealand) and dealt with significant tax issues.

(2) The plaintiff had high level experience in the provision of taxation services.

(3) The plaintiff was employed between 6 August 2004 (although the confirmation of her employment was slightly earlier) and 7 October 2005, namely, slightly over 12 months. Reference is made by the plaintiff to a period of engagement of 14 months which does not accord with the joint chronology tendered in the proceedings or the evidence of the plaintiff. Nothing turns on this issue because on any account the plaintiff’s term under the contract was relatively short. Despite a reference being made by the first defendant to the plaintiff having 4 hours work assigned on 4 October 2005, I do not consider that represented the giving of notice under the first agreement. Rather it was an allocation of work for the balance of an assignment. No notice was received on 7 October when the plaintiff was asked to leave work immediately, presumably because the assignment was treated as running its course and no notice was required.

(4) The security of her employment was not strong (in the sense of permanent full-time employment) given the arrangement continued on a daily basis until termination, but the position was treated as being akin to an Associate Director without interruption until termination and representations were made for ongoing permanent employment influencing the plaintiff to act to her detriment when another position was offered.

(5) I infer the plaintiff must have had a reasonably long term future with the first defendant but for the difficulties arising with the second defendant.

(6) The loss of her engagement in the circumstances which unfolded resulted in the plaintiff facing a significant period without finding alternative employment.

(7) At the time of her removal the plaintiff was about 45 years of age.

Bullying and Harassment

18. With respect to the claim for money orders in relation to this ground the Court determined that it would adopt the same approach to assessment and quantification as adopted with the termination of employment ground.

19. Again, it will be useful to set out the Court’s preliminary reasoning as to the assessment and quantification of the bullying and harassment ground, which was as follows (at [104]-[112]):

[104] I also accept the submission of the plaintiff that the unfairness of the arrangement was further exacerbated by the failure of the arrangement to make any provision to adequately protect the plaintiff from bullying or harassment or the resultant distress and harm. Further, the first defendant failed to provide for any appropriate mechanism for the investigation of complaints or protection from retribution.

[105] In the months preceding the plaintiff’s termination, the plaintiff sought recourse from the first defendant in relation to the bullying and harassment conduct of the second defendant. By early 2005, there began a deterioration in the working relationship between the plaintiff and the second defendant, which rapidly descended to a level which may be appropriate to be described as intimidating and involving harassment.

[106] Complaints were communicated to the authorised representatives of the first defendant on several occasions by many means. This included email correspondence, telephone correspondence and face-to-face meetings from early July 2005, and specifically on 18, 25 and 30 August 2005. The plaintiff correctly submitted that no explanation was provided by the first defendant to justify the lack of timely action taken in response to the complaint. The reasonable inference to be drawn from that evidence is that no adequate mechanisms had been put in place by the first defendant to ensure that complaint made by the plaintiff was adequately addressed and acted upon. In fact, the complaints were not effectively acted upon by the first defendant.

[107] It was clear that the first defendant considered that the second defendant’s conduct (at least on 25 August 2005) was unacceptable. This is hardly surprising given the second defendant had barred the plaintiff and her colleague from exiting the conference room, whilst he verbally abused them. He was described as being “very, very angry”, at the time, and “[his] face was bright red”. Nonetheless, the first defendant took no action to inform the plaintiff of its conclusions regarding the second defendant or steps to protect her from further intimidation. Rather the plaintiff was dismissed.

[108] A contract, as defined in s 105(1) of the Act, may be declared unfair if it fails to ensure that a fair process was undertaken prior to an employee (or other worker) having their engagement terminated on performance, conduct or redundancy ground: see, for example, Abboud v State of New South Wales (Department of School Education) (1999) 92 IR 32; [1999] NSWIRComm 449 at [49]-[50].

[109] Whilst the second agreement included a “Discrimination and Harassment” clause, the provision was inadequate due to it being one-sided in its operation. The clause purported to impose an obligation upon the plaintiff and RJ Group to not harass or discriminate against any person in the course of providing services to a client of Link (that is the first defendant). No reciprocal obligation was imposed upon Link to ensure that the plaintiff was not the subject of harassment or discrimination or that she would have an effective and practical remedy in that event.

[110] I agree with the submissions advanced by the plaintiff that the evidence in the proceedings supports the inference that the plaintiff’s engagement with the first defendant was terminated as a result of her complaints about the second defendant’s conduct in his dealings with her and Ms Mora. This supports the conclusion that the termination was based upon an unfair contract in the sense that the contract was unfair and harsh.

[111] The arrangement failed to contain adequate protective provisions to protect the plaintiff from bullying and harassment or to ensure adequate action was taken in the event the plaintiff had occasion to make a complaint or grievance particularly issues concerning the propriety of the second defendant professional conduct in the first defendant. The arrangement further became unfair because of the conduct of the first defendant in failing to address the behaviour of the second defendant or protect the plaintiff from its consequence.

[112] In respect of the ground of bullying and harassment, I conclude that the arrangement was unfair and harsh pursuant to s 105(1)(a) of the Act and, in particular, I find the contract was unfair and harsh.

20. It is also important to extract the Court’s approach to the assessment of the quantification of this ground. The relevant passages of Sutton No 3 are at [133]-[141] and are extracted below:

[133] The plaintiff submitted that an order should be made arising from the stress and humiliation she suffered as a result of the failure of the arrangement to include any adequate provision to protect her from bullying and harassment. The plaintiff did not claim compensation for loss occasioned by discrete medical or other expenses incurred as a result of her suffering distress and humiliation.

[134] It was submitted, that compensation may be awarded under s 106(5) of the Act for “distress” or “stress and suffering” arising from the unfairness of a contract or arrangement whereby work is performed is settled: see, for example, King v State Bank of New South Wales (No 2) (2002) 126 IR 407; [2002] NSWIRComm 353 at [114]; State of New South Wales v Banas (2004) 137 IR 63; [2004] NSWIRComm 255 at [101]-[105]; Wheelahan v North Coast Area HealthService [2008] NSWIRComm 164 at [254]-[256]; Brown v State of New South Wales (Department of Education and Communities) [2014] NSWIRComm 115 at [188]-[198]. I accept this submission so long as it is tempered by the observation that there must be a careful approach taken in assessing an appropriate money order with respect to the ground to avoid the “risk of double compensation”.

[135]   It was submitted, the failure of the arrangement whereby work was performed to contain provision to protect the plaintiff from bullying and harassment, or ensure that any complaints were properly acted upon, exposed the plaintiff to conduct peculiarly likely to cause distress and humiliation. The plaintiff has given evidence of feeling belittled and humiliated by the conduct of the second defendant and the failure of the first defendant to respond appropriately. The effect of the conduct was humiliation, distress and damage to the plaintiff’s career by virtue of reputational damage. I accept those submissions subject to the caveat that there must be avoidance of double counting of factors taken into account under the previous termination of employment heading associated with the difficulties in finding alternative employment. I also note that there was no material evidence as to the impact of the conduct of the first defendant upon the plaintiff.

[136]   The calculation of compensation in the nature of general damages for hurt, humiliation and distress will frequently not be susceptible to mathematical calculation. In Hall v A&A Sheiban Pty Ltd (1989) 20 FCR 217 at 256, for example, Wilcox J said (at 256):

[D]amages for ... injury to feelings, distress, humiliation and the effect on the claimant's relationships with other people are not susceptible of mathematical calculation ... [t]o ignore such items of damage simply because of the impossibility of demonstrating the correctness of any particular figure would be to visit injustice upon a complainant by failing to grant relief in respect of a proved item of damage.

[137]   It was submitted that some guidance can appropriately be drawn from decisions involving the award of general damages for hurt, humiliation or distress in other contexts: see, for example, the approach in Lee v Smith (2007) EOC 93-456; [2007] FMCA 59 (“Lee”) (where a general damages of $100,000 were awarded); Poniatowska v Hickinbotham [2009] FCA 680 (“Poniatowska”) (where a general damages of $90,000 was awarded); Nikolich v Goldman Sachs J B Were Services Pty Ltd [2006] FCA 784 (where an employee was awarded general damages of $80,000 for breach of contract including bullying and harassment); and Richardson v Oracle Corporation (Australia) Pty Ltd (2014) 223 FCR 334; [2014] FCAFC 82 (“Richardson”) (where general damages were increased on appeal from $18,000 to $130,000).

[138]   Reference was made to Walker v Citigroup Global Markets Australia Pty Ltd (2006) 233 ALR 687; [2006] FCAFC 101, where, it was submitted, the Full Federal Court increased damages to $100,000 for distress and effects on reputation and personal life arising from repudiation of an employment contract. The Full Court said (at [91]):

It is true that the evidence going to the consequential loss claimed by Walker was not great in volume but it was striking in its effect. The evidence did not need to be corroborated. It was not challenged. We do not agree that expert evidence was necessary. We are not clear what type of expert evidence would be required. The consequential effects of the loss of his job on Walker's business reputation and personal life, drastic as they were, are not out of the ordinary course of events. In the circumstances, we think the award of $5,000.00 is a significant under assessment of the loss which Walker suffered in this regard. If his evidence is accepted, as it must be, he suffered a considerable dislocation of his life with serious long term effects. In our view, the cross-appeal should succeed and an award in the amount of $100,000.00 should be substituted for the award of $5,000.00.

[139] Some care should be taken in obtaining guidance as to appropriate money orders from these authorities. Each matter turned upon its own facts and circumstances, noting that Lee, Poniatowska and Richardson involved issues of sexual discrimination and harassment.

[140]   In my view, the events which took place during the plaintiff’s engagement with the first defendant, particularly the conduct of the second defendant resulted with the plaintiff suffering humiliation and distress. The plaintiff is correct to submit that her unexplained termination of the arrangement, have had a serious and enduring impact upon the plaintiff personally and upon her reputation and career. Those effects were exacerbated by the failure of the first defendant to act upon her complaints or inform her of the outcome of its investigations.

[141]   I shall adopt the same approach to assessment and quantification as that adopted with respect to the termination of employment ground.

Mitigation

21. For the reasons discussed at [142]-[145] of Sutton No 3, the Court found that there was no basis for any money order made by the Court to be reduced by the operation of common law principles of mitigation.

Settlement with the Second Defendant

22. This issue, together with the following topic concerning interest, was the subject of directions by the Court requiring the plaintiff to make further submissions about those issues and giving leave to file further evidence. The plaintiff took advantage of those directions and filed submissions, with respect to both issues, and evidence in the form of an affidavit of Cheyne James Clarke sworn on 22 June 2017. I will incorporate discussion of the earlier rulings of the Court and those further submissions (and evidence) under this heading.

23. The Court’s consideration of the implications of the settlement with the second defendant were discussed at some length in [147]-[163] of the judgment. Nonetheless, and having regard to the further submissions of the defendant in relation to the matter it is appropriate that those portions of the judgment be set out. I extract the relevant passages below:

[147] The plaintiff was able to reach a settlement against the second defendant prior to the proceedings being heard. The plaintiff accepted that, where relief is sought for the same loss against more than one defendant, the Court may (but is not required to) take into account a settlement as against one defendant to ensure the plaintiff does not receive double recovery: Miletich v Murchie (2012) 297 ALR 566; [2012] FCA 1013 (“Miletich”) at [121]-[125]; Ewin v Vergara (No 3) (2013) 307 ALR 576; [2013] FCA 1311 (“Ewin”) at [685]-[691].

[148] In assessing the question of whether “double recovery” arises from a settlement against one defendant, a party may be entitled to deduct the costs incurred in pursuing an action before giving credit for the amount received: Banque Keyser Ullman SA v Skandia (UK) Insurance Co Ltd (No 2) [1988] 2 All ER 880 (“Banque”) at 882; Nau v Kemp & Associates Pty Ltd (2010) 77 NSWLR 687; [2010] NSWCA 164 (“Nau v Kemp”) at [108]; Miletich at [124]-[125]; Ewin at [691].

[149]The first authority relied upon by the plaintiff in this regard was Banque. Steyn J sets out the accepted principle:

[A] plaintiff who has a claim against two defendants cannot recover more than his total loss, and must therefore give credit for any sum received from one defendant in or towards satisfaction of the claim, whether received before or after judgment.

[150] The judgment also concerned the entitlement of a plaintiff to deduct the costs incurred in pursuing an action before giving credit for the amount received upon the settlement with one defendant. The approach of Steyn J was as follows (at 882-883):

The first live issue, as between Chemical and Skandia, is whether the costs of the action against Notcutt ought to be deducted from the credit to be given. Notcutt was liable to Chemical on the ground of Notcutt's vicarious responsibility for the fraud of an employee. I am satisfied that Notcutt would have been held liable in full for the agreed costs if the matter had proceeded to trial against Notcutt. The principle appears to be that if a plaintiff who receives payment from one tortfeasor establishes an additional separate claim against that tortfeasor, the payment is allocated first to that claim, and credit must be given in favour of the second tortfeasor only for the excess necessarily referable to the overlapping claim. … It also appears to me to be the approach which is required by an application of first principles. Prima facie therefore the costs of Chemical's action should be deducted from the credit to be given for the receipt of money under the Notcutt settlement.

… More importantly, the terms of settlement expressly provided that the recovery against Notcutt would be in full and final settlement of the banks claims 'including claims for costs'. These words cannot be treated as pro non scripto or as a sham. The argument based on the actual allocation of the proceeds of the settlement between the banks is a tenuous one. In multi-party disputes an element of arbitrariness frequently enters into the calculation of recovery by way of overall settlement. That may have been so in the present case. Certainly, it would be wrong to read the contract as if the words 'including claims for costs' were not there. And there is nothing in the terms of settlement which serves to displace the general principle that the credit to be given to one tortfeasor in respect of recovery from another tortfeasor must be adjusted to take into account any additional and separate claim which the plaintiff had against the second tortfeasor.

…

This decision supports the general principle which I have stated, and authoritatively makes clear that there is no general equitable principle of pro-rating in such cases.

[151] In Banque, Steyn J concluded “the agreed costs of the action against Notcutt must be deducted from the recovery made under the terms of settlement before credit is given”.

[152] The second authority relied upon by the plaintiff, Nau v Kemp concerned the application of section 5(1)(b) of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) in the context of consent judgment entered against one tortfeasor. The judgment confirmed the provision applied only to a judgment awarding damages arrived at by judicial assessment not to a consent judgment implementing the settlement of an action. McColl JJA considered the Banque principle at [108]:

It might be noted that where, as in the present case, the settlement is inclusive of costs, the party against whom the defence of satisfaction is pleaded will be entitled to deduct the costs of the settled action before having to give credit for the amount received under the settlement: Banque at 882, per Steyn J.

[153] The decision did not address the approach to be taken by the Court in this calculation. Her Honour simply noted that “[t]here may be room for debate as to how that figure should be determined” (at [108]).

[154] Two Federal Court decisions in Miletich (per Gray J) and Ewin (per Bromberg J), were also relied upon by the plaintiff. Both decisions considered Banque and go further to suggest an appropriate course for the Court with respect to such deductions.

[155] Gray J in Miletich applied the principles set out by Steyn J in Banque as follows (at [124]):

(1) the amount of a settlement against one joint tortfeasor must be taken into account in determining the amount of damages to be awarded against another joint tortfeasor; and

(2) in the case of a lump sum settlement, the costs incurred by the claimant in pursuing the joint tortfeasor with whom the settlement was reached should be deducted from the lump sum, in order to determine the amount to be taken into account in assessing damages against the other joint tortfeasor.

[156] In accordance with these principles, the Gray J in Miletich made the following finding (at [126]):

Further evidence will be required before the amount of that judgment and, consequently, the amount of interest to be included in the judgment, can be determined. The appropriate course is to order that the applicants file and serve an affidavit detailing the terms of settlement reached between them and Mr Murchie and Wilmot Murchie and, if necessary, setting out the amount they claim to be entitled to deduct from any lump sum settlement by way of costs. The applicants should also be ordered to file and serve minutes of proposed orders that reflect these reasons for judgment. The proceeding should be listed for further hearing on a suitable date, on which submissions as to the appropriate orders can be made.

[157] It was noted that the terms of settlement were offered to the Gray J in the course of proceedings, however his Honour “[initially] declined on the basis that I did not wish to be influenced in determining any issues of apportionment by knowledge of what the applicants had already recovered through the settlement.” However, upon applying the principles set out in Banque, such evidence was deemed essential to prevent double counting or recovering more than the sum that is due: see also, Townsend v Stone Toms & Partners (1984) 27 BLR 26 at 38.

[158] The approach of Gray J was accepted as “appropriate” by Bromberg J and applied in Ewin at [691]:

The appropriate course there adopted, and which I will here follow, is to order Ms Ewin to file affidavit material disclosing the terms of any settlement with LLA, Robert Walters or any other person and the amount, if any, Ms Ewin claims she is entitled to deduct from any lump sum settlement on account of costs. The basis for any such deduction for costs will need to be verified by affidavit. I note in that respect that where a settlement is inclusive of costs, the party against whom double recovery is pleaded is entitled to deduct the costs of pursuing an action against the party with whom settlement was reached before giving credit for the amount received under the settlement: see Miletich at [124]–[125] per Gray J and Nau v Kemp & Associates Pty Ltd (2010) 77 NSWLR 687; [2010] NSWCA 164 at [108] per McColl JJA, both citing Banque Keyser Ullman SA v Skandia (UK) Insurance Co Ltd (No 2) [1988] 2 All ER 880 at 882 per Steyn J.

[159] I consider Banque, Miletich and Erwin state principles which should be applied in assessing money orders under s 106(5) in this matter, even though they related to different causes of action.

[160] When viewed in the light of those authorities, the material before the court creates a prima facie basis “to deduct the costs of pursuing an action against the party [being a co-defendant] with whom settlement was reached before giving credit for the amount received under the settlement”, given that settlement with the second defendant was, on the material before the Court, “inclusive of costs”. However, a conclusion as to the issue requires a closer examination of the terms of settlement, as contemplated with aforementioned authorities, and the factors which are mentioned in the following paragraph of this judgment. The terms of the consent order (in MFI A) states that the costs included in the settlement incorporated all past costs as between the plaintiff and the second defendant including those arising in relation to the interlocutory judgment of Kite AJ on 11 August 2015. The consent order provided that the Court would note that a Deed of Settlement will be entered into by the parties.

[161] In respect of costs, the Court received an affidavit of Stuart Brady affirmed on 24 February verifying the substantial costs incurred by the plaintiff in these proceedings being a total of $502,661.78 (marked Ex A in the proceedings). However, there were no submissions particularising the basis for those costs or whether the questions raised under this heading should be assessed on the basis of costs as charged by the various legal representatives of the applicant over time or on some other basis such as party-party costs. Further, there would appear no delineation, by submission, as to whether those costs were attributable to proceedings involving the first and or second defendants.

[162] In respect of the deduction sought by the plaintiff, this contention must be supported by evidence. Gray J referred to the filing of “an affidavit detailing the terms of settlement reached”. Bromberg J adopted the same approach. I consider the approach adopted in those matters should be adopted in the present matter with accompanying submissions.

[163] In the result, I propose to hear further from the applicant about the issue of the settlement with the second defendant by giving leave to file further evidence by affidavit dealing with that question and by making of directions for the filing of written submissions.

24. The submissions of the plaintiff make reference to her earlier written submissions filed on 24 February 2017. However, that reference would seem to serve no purpose given the further submissions, that the plaintiff was given an opportunity to make, were intended to be responsive to the abovementioned observations and findings of the Court.

25. Nonetheless, the plaintiff made substantial submissions as to this question as follows:

10. The Court is not required to reduce any compensation order as against the first defendant by reason of the settlement with the second defendant. Any order capable of being made under s 106(5) of the Act is subject to an assessment as to what is just in the circumstances of the case. In the present matter, the Court has found that the arrangement whereby the plaintiff performed work for the first defendant was an unfair contract by reason of the failure to protect the plaintiff for arbitrary termination and from bullying and harassment conduct.

11. The Further Amended Statement of Claim pleaded (paragraph 43) that the second defendant was culpably involved in and/or connected to the terms of the arrangement, the performance of the arrangement and the termination of the arrangement so as to be jointly and severally liable for payments made to the plaintiff. What orders could have been made against the second defendant, and the extent of any overlapping liability, would ultimately have depended upon an assessment of the connection between the second defendant and the unfairness in the arrangement.

12. In addition, the deed of settlement between the plaintiff and the second defendant makes clear that, in return for the payment, the plaintiff gave up any claims that she may have had against the second defendant. The whole of the settlement sum paid cannot, in those circumstances, be attributed to the settlement of the claims in these proceedings. Any reduction of the award of compensation against the first defendant could only arise with respect to common and overlapping claims: see, for example, RACV Insurance Pty Ltd v Unisys Australia Ltd [2001] VSC 300 at [555].

13. If the Court were inclined to take account of the settlement as against the second defendant, the costs of pursuing that claim must be considered. Where, as in the present case, a settlement is inclusive of costs, the party will be entitled to deduct the costs of the settled action before having to give credit for the amount received under the settlement: Banque Keyser Ullman SA v Skandia (UK) Insurance Co Ltd (No 2) [1988] 2 All ER 880 at 882; Nau v Kemp & Associates Pty Ltd (2010) 77 NSWLR 687 at [108]; Ewin v Vergara (No 3) (2013) 228 IR 118 at [691]. What should be deducted is the “the costs of pursuing an action”: Ewin v Vergara (No 3) (2013) 228 IR 118 at [691]. That can only be understood as the actual costs paid by the plaintiff with respect to the claim that was settled.

14. The plaintiff has filed a further affidavit of [Cheyne Clarke] affirmed on 28 June 2017 in relation to the costs incurred in the proceedings as against the second defendant. The further affidavit of [Ms Clarke] indicates that:

(a) The plaintiff incurred costs of at least $56,262.24 in relation to the joinder of the second defendant;

(b) The plaintiff incurred costs of at least $24,828.63 in relation to the period from the joinder of the second defendant to the time when the first defendant ceased to play an active role in the proceedings on 24 February 2016; and

(c) The plaintiff incurred costs of at least $149,719.17 in relation to the period from 24 February 2016 to 9 February 2017 during which the proceedings were actively defended by the second defendant and the first defendant played no role in the proceedings; and

(d) The plaintiff incurred some additional costs during this period in relation to which the relevant invoices are not available to her.

15. The total costs incurred by the plaintiff during this period were $230,810.61. It is accepted that, of this figure, $14,816 appears to have been jointly attributable to the joinder motion and the efforts to join Mr Cochrane. That sum should be attributed 50% to the pursuit of the action against the second respondent. Accordingly, the total costs attributable to pursuing the claim against the second defendant are at least $223,402.61. That amount also represents an underestimate given that the plaintiff incurred additional costs in relation to which she has been unable to locate the relevant invoices.

16. The plaintiff submits that this figure represents the minimum costs incurred by the plaintiff in pursuing the action as against the second defendant. The costs incurred in joining the second defendant and of subsequently pursuing the proceedings defended by the second defendant only are properly attributable to the action against the second defendant. Those costs would not have been incurred but for the active defence of the proceedings by the second defendant. At least that sum would need to be taken into account in assessing the impact of the settlement with the second defendant.

17. Furthermore, if the Court were to consider the settlement with the second defendant in assessing the compensation payable by the first defendant, it should first determine any compensatory payment to be awarded, then apply interest to that amount and finally taking into account any risk of double recovery.

(The extract from the submission was varied in the manner shown after the plaintiff’s solicitors confirmed an errata in the original form).

26. For reasons I will develop below, I consider the settlement with the second defendant should be taken into account in assessing the compensation payable by the first defendant. However, I agree with the submission of the plaintiff in the final paragraph of her submission, extracted above, that the Court should first determine any compensatory payment awarded, then apply interest to that amount and finally take into account any risk of double recovery: Westfield Holdings v Adams (2001) 114 IR 241; [2001] NSWIRComm 293 at [161](7). Given that approach I will firstly turn to the assessment of monetary compensation, with respect to the two grounds made out by the plaintiff, before turning to interest (noting the further submission of the plaintiff in that respect) before returning to the assessment of the implications of the settlement with the second defendant.

Interest

27. In Sutton No 3, the Court entertained a short discussion as to interest as follows (at [164]):

[164] It was submitted, an order should also be made for the payment of interest on any amount ordered to be paid by first defendant under s 106(5) of the Act. The proceedings have taken, it was contended, an extraordinary period to conclude and resulted in the plaintiff bearing the losses she has incurred for in excess of a decade. Further, it was contended a useful summary of the procedural history is set out in the judgment of Kite AJ in Sutton v BE Australia WD Pty Ltd (No 2) [2015] NSWIC 9 at [7]-[8]. Kite AJ further noted (at [30]):

On the face of events there has been a substantial lapse of time between the termination of the contract and the pressing of this application. I do not consider it can be said that the applicant has been dilatory in prosecuting her claims. The chronology provides ample explanation for the lapse of time in particular the decision by the respondent in 2009, just prior to the scheduled trial, to enter voluntary administration, required the applicant to take a number of procedural steps to be able to continue the prosecution of those claims. Those reactive steps have been opposed and, necessarily, litigated. That has taken time.

In these circumstances, the plaintiff contended the Court should make an order for the payment of interest upon any payment required to be made by the first defendant. I accept that submission. The plaintiff submitted that the convenient course would be for the plaintiff to be given leave to file a schedule of interest after judgment. That step would be premature given the further submissions sought from the plaintiff. I do require, however, submissions to be filed dealing with the basis upon which, it is contended, interest should be calculated including the date from which interest should be calculated.

28. As earlier noted further submissions were received by the plaintiff as to interest which submissions were as follows:

2. In its judgment, the Court accepted (at [165]) that submissions of the plaintiff that there should be an order for the payment of interest upon any payment required to be made by the first defendant. However, the Court requested submissions be filed dealing with the basis upon which interest should be calculated, including the date from which interest should be calculated.

3. The Court has the power to award a component for interest as part of its power under s 106(5) of the Act to make such order as it “considers just in the circumstances of the case”: Thomas Nationwide Transport Ltd v Thomas (1990) 34 IR 378 at 383 and 392; Westfield Ltd v Helprin (1997) 82 IR 411 at 443-444; Abboud v State of New South Wales (Department of School Education) (No 2) (2000) 99 IR 299 at 306-307; King v State Bank of New South Wales (No 3) (2003) 126 IR 443 at [16]-[20]. In addition, this Court is able to make an order for the payment of interest under s 100 of the Civil Procedure Act 2005 in any proceedings for the recovery of money.

4. The purpose of the discretion to order the payment of interest is to permit a

successful party to be properly compensated for the practical loss suffered: MBP (SA) Pty Ltd vGogic (1991) 171 CLR 657 at 663; Haines v Bendall (1991) 172 CLR 60 at 66 and 72; Andjelic v Marsland (1996) 186 CLR 20 at 25. Where a party to a contract whereby work is performed suffers loss by reason of the contract being an unfair contract within the meaning of the section, it is just in the circumstances of the case that an order be made for the payment of interest on any loss to compensate the person for the passage of time from the date the loss is suffered to the date of judgment.

5. In this matter, the Court has accepted that monetary orders should be made with respect to loss suffered by the plaintiff as a result of the failure of the arrangement whereby she performed work to protect her from arbitrary and immediate termination (at [127]-[132]) and by reason of the humiliation and distress and damage to her reputation and career occasioned by the conduct of the second defendant (at [140]). The loss suffered by the plaintiff in both respects was a result of the unfairness evident in the arrangement whereby she performed work for the first defendant.

6. The arrangement whereby the plaintiff performed work was terminated on 7 October 2005 and the loss crystallised at that time. The proceedings were commenced on 1 November 2005 and there was no delay in the commencement of proceedings which would warrant denial of an award of interest from the date of the termination of the arrangement: see, for example, O’Brien v Australian Native Landscapes Pty Ltd (2001) 105 IR 409 at [96]. The primary position of the plaintiff is that interest should be awarded from 7 October 2005 or, in the alternative, from the commencement of proceedings on 1 November 2005.

7. Although there has been a significant lapse of time in the resolution of the

proceedings, as noted in the judgment of Kite AJ in Sutton v BE Australia WD Pty Ltd (No 2) [2015] NSWIC 9 at [7]-[8], the delay was not occasioned by any conduct on the part of the plaintiff and primarily arose from the first defendant being placed in administration. The length of time the proceedings have taken to finalise have, in fact, exacerbated the loss suffered by the plaintiff by reason of delay in recovery and underlines the appropriateness of an award with respect to interest.

8. Interest should be calculated at the rates set out for prejudgment interest in Practice Note SC Gen 16 and Rule 16(8) of the Uniform Civil Procedure Rules 2005. The Court indicated (at [165]) that it would be premature to file a schedule of interest until a determination as to compensation to be awarded. The plaintiff is content to file a schedule of interest after further judgment in relation to the orders to be made under s 106(5) of the Act.

29. I shall address my conclusions as to this issue under the following heading of this judgment.

Money Orders: Assessment

Termination of Employment

30. The money orders made by the Court must ultimately reflect an assessment by the Court as to which is just in the circumstances of the particular case.

31. In the circumstances described in Sutton No 3 and in particular [96]-[103] thereof, I consider that the arrangement should be varied to provide for 5 months notice at the remuneration of $140,000 per annum (see reflected in [44] of this judgment). The ultimate money order made in the matter will take into account a sum reflecting the non-payment of such a period of months by the first defendant together with the sums arising out of the bullying and harassment ground and interest, adjusted for the settlement with the second defendant.

Bullying and Harassment

32. Having regard to the finding at [140] of Sutton No 3, it is necessary to reach a conclusion as to the appropriate money order referable to this ground.

32. As noted at [136] of Sutton No 3, such an assessment cannot be undertaken with mathematical precision. The ultimate question to be answered in this respect is what would represent a just outcome, with respect to this ground, in all the circumstances of the matter. However, the observations of the Full Bench of the Industrial Court of NSW in King v State Bank of New South Wales (No 2) (2002) 126 IR 407; [2002] NSWIRComm 353 (“King No 2”) (per Wright P, Walton VP and Cavanaugh J) need to be borne in mind. The Court there observed (at [114]) as follows:

[114] Once it is recognised, as his Honour did, that "some degree of stress and financial hardship is likely to be meted out to any employee upon any termination" of employment, two considerations immediately follow when contemplating whether to award an amount pursuant to s 106(5) in this area and, if so, what amount is appropriate. First, unless a very careful approach is taken there is a tangible risk of double compensation. Second, the precise basis for the award must be specified to ensure that situation does not occur.

34. Before turning to those particular considerations I propose to briefly return to the authorities relied upon by the plaintiff.

35. As to the authorities referred to in [136]-[139] of Sutton No 3, it is unnecessary to make further observations than those contained in the judgment in Sutton No 3, save for the mention of one further consideration with respect to the judgment in Walker v Citigroup Global Markets Australia Pty Limited (2006) 233 ALR 697; [2006] FCAFC 101 (“Walker”).

36. In the extract from Walker referred to in [138] of Sutton No 3, the Full Federal Court stated that the evidence of consequential loss of Mr Walker was “not great in volume but striking in its effect”. The Full Court found that Mr Walker suffered “a considerable dislocation of his life with serious long term effects”.

37. Those conclusions relate, in my view, to the summary of evidence by the primary judge referred to in [71] of the Full Court’s judgment. That summary refers to evidence considered by the primary judge as to consequential loss after “the misleading and deceptive conduct”. The Full Court ultimately found that it was unnecessary to make an assessment under that head of claim as the assessment of damages for breach of contract found by the Court exceeded the damages awarded by the trial judge for economic loss with respect to liability under the Trade Practices Act 1974 (Cth). Nonetheless, it would appear that the Full Court was relying upon that evidence as to consequential loss (at [101] of its judgment)(see the abovementioned extract from Sutton No 3), as the loss occasioned after the breach of contract, which was taken into account by the Court. The evidence, so described, involved no expert or other evidence but evidence of a breakdown of Mr Walker’s marriage and the loss of day-to-day company of his children in the year after the breach (or misleading and deceptive conduct).

38. I turn then to the various authorities of the Industrial Court of NSW concerning the application under s 106 of the Act referred to by the plaintiff.

39. In King No 2, the Court upheld an appeal against a sum of money awarded at first instance for stress and financial hardship. Marks J had found in King v State Bank of New South Wales [2000] NSWIRComm 229 at [109] that Mr King should be awarded compensation in the sum of $15,000. The award was not made for the clinical depression suffered by Mr King following his termination of his employment but for the stress caused by the respondent as a result of depriving him of monies which he was due which caused financial hardship. On appeal the Full Bench reduced the award of compensation to $5,000 (King No 2 at [115]).

40. In the State of New South Wales v Banas (2004) 137 IR 63; [2004] NSWIRComm 255 (“Banas”), the Full Bench of the Industrial Court found at [101] and [104] as follows:

[101] As to Haylen J's order for the payment of $12,500 for stress and suffering arising in the course of the respondent's employment, his Honour provides no reasons or explanation in his judgment as to how he arrived at that figure. The claim in the amended summons was for an amount of $40,000 to compensate for the depressive illness suffered by the respondent but no indication was provided as to how that amount was calculated.

…

[104] Nonetheless, we have decided that given the extent of stress and suffering to which the respondent was exposed and its duration, we do not propose to interfere with his Honour's order although we regard it as being at the high end of what was appropriate.

41. It was clear that the Full bench was concerned in that account as to the risk of double counting (see at [102]-[105]).

42. In Brown v State of New South Wales (Department of Education and Communities) [2013] NSWIRComm 115, Boland J found that the failure of the applicant to win a permanent Aboriginal Education Officer position was “a factor of some weight in causing Ms Brown’s psychological injury and compensation in that regard [was] appropriate” (at [193]). His Honour had regard to the risk of double compensation referred to in King and disallowed any compensation for psychiatric injury arising from the treatment of Ms Brown at the hands of the Principal of a school. His Honour also made some allowance for medical expenses. He awarded a sum of $5,000.

43. In Wheelahan v North Coast Area Health Service [2008] NSWIRComm 164, Boland J again heard an application under s 106 of the Act. In that matter it was submitted that the medical evidence was consistent in demonstrating that the applicant suffered from an adjustment disorder with anxiety and depression and that the matter was analogous to Banas. An amount of $15,000 compensation for stress and suffering was claimed arising out of the applicant’s employment (at [155]). His Honour found that there was a direct relationship between the applicant’s medical condition and the unreasonable and unfair treatment and conduct of the respondent that had led to the contract being unfair (at [256]). He found it was appropriate, therefore, that a separate amount should be paid by the respondent, in relation to that aspect of the applicant’s claim, and made an order of $10,000 for “stress and suffering”.

44. In a similar fashion, in this matter, it was found that the personal and reputational consequences for the plaintiff flowed from the failure of the first defendant to protect the plaintiff, with adequate provisions in the arrangement, from bullying or harassment and the failure to ensure that adequate action was taken to deal with her complaint regarding the conduct of the second defendant. The plaintiff’s unexplained termination had a direct relationship to those failures.

45. At [104] of Sutton No 3 it was found, under this ground of the claim, the plaintiff had established that there had been a serious and enduring impact upon the plaintiff both personally and upon her reputation and career. Those findings were broad in nature and require some refinement for the purposes of more precisely assessing money orders.

46. There is no doubt that the plaintiff suffered personally through humiliation, embarrassment and stress as a result of the unfairness of the contract. There was no evidence, however, that she suffered psychological harm (other than an indication that there were medical receipts not claimed) and there was an absence of a precise definition of the nature of the ongoing impact upon her, although, broadly speaking, it may be described as “serious”. Whilst the Court did not make findings under the ground of disparagement, many aspects of the evidence concerning that ground were instrumental in demonstrating the plaintiff had suffered a loss of career opportunities and reputational damage arising from the unfairness of the arrangement.

47. Having regard to the decision in King No 2, it is also necessary to ensure that there is no double counting, with respect to the factors taken into account under the termination ground, such as the loss of long term future employment with the first defendant and the loss of her engagement in circumstances, which unfolded after he termination, resulting in the plaintiff suffering a significant period without finding alternative employment.

48. The balancing of all those considerations results, in my view, in a finding that a money order of $20,000 would be appropriate under this ground. That amount will be taken into account for the purposes of assessing final money orders after allowance is made for the settlement with the second defendant.

Interest

49. I accept the plaintiff’s submission as to interest, save that the assessment of interest should be calculated from 1 November 2005. A just assessment of interest will have interest calculated upon the loss occasioned by reason of the arrangement being an unfair contract and, accordingly, should be assessed against money amounts referrable to the termination of employment and bullying and harassment grounds, before deduction of any amount corresponding to settlement with the second defendant.

Settlement with the Second Defendant

50. Having regard to the further submissions of the plaintiff, in this respect, and the earlier discussion by this Court in Sutton No 3, I consider that it is appropriate to take into account the settlement with the second defendant in this matter in relation to the assessment of money orders in favour of the plaintiff, with respect to declarations and findings made against the first defendant. This course is necessary in order to prevent double recovery as there are overlapping elements of the declarations and the findings of unfairness by the Court as to the first and second defendants.

51. That conclusion needs to be qualified in two respects. First, the total costs attributable to the claim against the second defendant should be taken into account in assessing the impact of the settlement of the second defendant. Having regard to the submissions of the plaintiff, I consider it is appropriate to remove from any deduction for the settlement with the second defendant an amount of $230,000, representing the costs component of that settlement. Secondly, I do not consider that the settlement with the second defendant should be approached on the basis that the contribution by the second defendant is equal to the first defendant with respect to findings of the existence of an unfair contract under s 105(1)(a) of the Act. I consider that the contribution of the first defendant to the unfairness of the arrangement resulting in compensation is greater than that of the second defendant.

52. I will not quantify the impact of the settlement with the second defendant at this stage, but rather, I will adopt the following procedure before making a final assessment in that respect.

CONCLUSION

53. I consider that money orders should be made under s 106(5) pursuant to the plaintiff’s application in this matter. The Court has partially ruled upon the elements of such orders earlier in this judgment. In the directions I will make, the plaintiff will be required to quantify such orders and, if appropriate, make further submissions as to the settlement with the second defendant in accordance with this judgment. Submissions will be required in relation to any application for costs.

DIRECTIONS

54. The Court makes the following orders and directions all of which shall require compliance within 21 days of the publication of this judgment:

1. The plaintiff shall file in the form of short minutes of order or a schedule reflecting the following:

1. The quantification of compensation payable by the first defendant under the termination and bullying and harassment grounds in accordance with the terms of this judgment;

2. The application of interest to that amount in accordance with the determination as to the approach to interest set out under the corresponding heading of this judgment;

2. The plaintiff has liberty to file any final submissions as to the implications of the settlement with the second defendant. Those submissions shall be limited to the question of any deduction arising from the settlement with the second defendant and may address the issue of apportionment between the first the second defendants (after the deduction of costs referable to the proceedings against the second defendant).

3. The plaintiff shall file any application as to costs against the first defendant and any submissions in support thereof.

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Decision last updated: 25 August 2017