Whittaker v Unisys Australia Pty Ltd

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. 7236 of 2008

ANDREW WHITTAKER	Plaintiff
v
UNISYS AUSTRALIA PTY LIMITED	Defendant

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JUDGE:	ROSS J
WHERE HELD:	Melbourne
DATESOF HEARING:	1 and 2 December 2009
DATE OF JUDGMENT	29 January 2010
CASE MAY BE CITED AS:	Whittaker v Unisys Australia Pty Limited
MEDIUM NEUTRAL CITATION:	[2010] VSC 9

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EMPLOYMENT CONTRACT – Unilateral removal of an employee from his former position – Proposed new role constituted a substantial diminution in status and responsibility – Repudiation of contract – Employer’s actions evinced a plain intention not to be bound by the existing contract – Employee exercised election to terminate the contract – Entitlements to notice and severance pay – Task of construing the contract to be approached in a commonsense non-technical way – Meaning of ‘redundancy’ and ‘restructuring’ – Incorporation of Redundancy Policy by reference – No incorporation – Mitigation – Plaintiff did not act unreasonably – Entitled to six months’ pay.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr C Gunst QC with Mr W Friend	AJ Macken & Co
For the Defendant	Mr J Fernon SC	Baker & McKenzie

HIS HONOUR:

Introduction

Mr Whittaker commenced employment with Unisys Australia Limited (‘Unisys’) on 12 March 2002 and in September 2005 he was offered and subsequently accepted the role of Vice President and General Manager Unisys Global Commercial Industries, Asia Pacific (‘the VP and GM position’).

In February 2008, Mr Andrew Barkla, the Vice President and General Manager, Asia Pacific for Unisys Australia, met with the plaintiff and discussed a change in his role. Mr Barkla was the plaintiff’s immediate superior. Mr Barkla said that he saw Mr Whittaker moving to a new role focussing on negotiating and closing ‘mega deals’ (‘the mega deal role’) and that Suzanne Carter would be promoted to the plaintiff’s former VP and GM position.

The change in Mr Whittaker’s role and the promotion of Suzanne Carter to the plaintiff’s position was communicated to the organisation in an email broadcast from Andrew Barkla on 12 February 2008.

At no stage did Mr Whittaker agree to undertake the proposed new role.

Mr Whittaker saw the mega deal position as a downgrading of his previous role and says that, by its conduct, Unisys repudiated his contract of employment. By letter dated 10 April 2008, he purported to elect to accept that repudiation and as a consequence his employment was terminated on that day.

The plaintiff claims that he is entitled to six months’ pay in lieu of notice (amounting to $275,304.50) and a redundancy payment based on two weeks pay per year of service (amounting to $176,153.77). The plaintiff also claims interest, at a rate prescribed by the Penalty Interest Rates Act 1983, and costs.

The defendant says that there was no repudiation of the plaintiff’s contract of employment and therefore no entitlement to the sums claimed.

The main issues in contention are as follows:

(i)Did Unisys repudiate Mr Whittaker’s contract of employment? (‘the repudiation’);
(ii)In the event that Unisys repudiated the contract is Mr Whittaker entitled to six months pay in lieu of notice? (‘the notice claim’);
(iii)Did the defendant’s redundancy policy form part of Mr Whittaker’s contract of employment and if it did was he entitled to an additional two weeks pay per year of service? (‘the redundancy claim’); and

(iv) Has the plaintiff failed to mitigate his loss? (‘mitigation’)

Before turning to each of these issues, I propose to briefly set out the background to the present proceeding.

Background

Unisys is incorporated pursuant to the laws of Australia and its registered office is at 16 Homebush Bay Drive, Rhodes, New South Wales.

The plaintiff was offered and subsequently accepted employment with the defendant (then trading as Unisys Australia Limited) on 30 January 2002, in the position of General Manager-Transportation, Asia Pacific, located in Melbourne. In that role the plaintiff initially reported to Messrs Oliver Houri (the Vice President and General Manager Global Industries Transportation) and Ron Frankenfield (the then Vice President and General Manager Asia Pacific, later succeeded by Mr Barkla).

The letter of offer is set out at CB 15-23 and stated, among other things, that the following documents formed the basis of Mr Whittaker’s contract of employment with Unisys:

▪this letter, outlining the principal conditions and benefits of your employment with Unisys Australia Limited;
▪Employee Agreement Business Practices Policy;
▪Employee Agreement as to Patents, Inventions and Other Creative Property Rights Regarding Competitive Activities

and require your formal acceptance …” (emphasis added)

The terms of the letter of offer are central to this proceeding and I will return to them later.

The plaintiff commenced employment with Unisys on 12 March 2002 and in September 2005 he was offered and subsequently accepted the VP and GM position.[1]
[1]Whittaker witness statement at para 14.

In July 2007, Mr Whittaker’s remuneration increased to an annual gross remuneration package of $550,609 (including superannuation contributions of $63,000 made by the defendant on behalf of the plaintiff). At that time, the plaintiff was also entitled to participate in a bonus plan described as the Unisys Executive Variable Compensation Plan (the ‘EVC plan’). While Mr Whittaker had no entitlement to be paid a bonus under the EVC plan, in practice such bonus payments were a significant component of his total remuneration (up to the 40 per cent of his base remuneration).[2]
[2]Exhibit A1 at paras 15-18, Tx p 54 , lines 26-31 and p 143, lines 23-26.

On 7 and 11 February 2008 the plaintiff met with Andrew Barkla. During those meetings a proposed new management role for the plaintiff within the Global Industries business was discussed. Mr Barkla said that he saw the plaintiff as the big deal maker in the Transportation sector and that he would like him to be free of all other distractions to focus on making the big deals happen. Mr Barkla also said that Suzanne Carter would be taking up the plaintiff’s position as VP and GM of Global Commercial Industries in Asia Pacific.

In the email broadcast of 12 February 2008 Mr Barkla said that effective immediately Ms Carter would be promoted to the position of VP and GM of Global Commercial Industries in Asia Pacific. In relation to Mr Whittaker’s role, Mr Barkla said:

Ensuring we are focussed on closing out major deals in the fast growing Transportation sector in Asia Pacific, I have asked Andrew Whittaker to step into a mega deal position reporting to me. Andrew has a great passion for the Transportation sector and as the pipeline reflects major deals in the region across Airports, Airlines, Cargo, Enterprise Security, I am confident Andrew will make a great contribution to our $1 billion order aspiration in the year ahead.

On 20 February 2008, the plaintiff sent an email to Mr Barkla requesting a Position Description and information on how the incentive component of his salary would be structured. Mr Whittaker said that prior to accepting the role he would need to give it serious consideration and would need additional information to do this.[3]
[3]CB 180.

Mr Barkla responded the following day and said that he would be working with Mr Tony Lehner, Vice President, Human Resources to finalise the role description, but that the job would continue to be on the same responsibility band as the plaintiff’s previous role and that the plaintiff would continue to report directly to him with a dotted line into Olivier Houri.[4]
[4]CB 181.

On 27 February 2008, Mr Barkla asked the plaintiff if he had had an opportunity to consider the role which he had been offered. The plaintiff observed that he had yet to see a position description, or description of accountabilities, responsibilities or remuneration. Mr Barkla said that he was still discussing these issues with Mr Lehner and that he would get something back to the plaintiff later that week.

On 5 March 2008, Mr Lehner provided the plaintiff with a position description and scheduled a meeting for 12 March 2008 to discuss the various remuneration packaging options that were being considered for his new role.[5] The meeting proposed for 12 March was subsequently cancelled and was not rescheduled. I deal with the position description in more detail later.
[5]CB 184-186.

Mr Whittaker met with Mr Barkla on 1 April 2008 and discussed the mega deal position. At that meeting, Mr Whittaker was told that he would remain on the EVC plan but it was apparent that his personal targets for achieving bonus payments had not yet been finalised.

On 10 April 2008, Mr Whittaker met with Mr Barkla and presented him with a letter outlining his position and accepting the repudiation of his contract of employment. The letter is set out in CB 196-198 and is in the following terms:

I am writing in relation to the restructuring of the Global Industries business unit that you initially discussed with me on 7 February and subsequently announced to all Unisys employees in Asia Pacific on 12 February 2008.
That initial discussion and announcement placed me in a ‘Transportation mega deal’ role, in which you envisaged I would put my energies into assisting the various Transportation teams across APAC to bring in ‘mega deals’, a term at that stage undefined, but understood within the Unisys environment to mean deals over US$50m.
From our subsequent discussions, and emails from Tony Lehner, it became evident that the position that you proposed for me had not been clearly thought through prior to issuing the announcement to staff on 12 February, or appointing Sue Carter to my previous position. Since then I have had no substantive role.
It was only at out meeting on 27 February at Market Street that we debated what size of deal should be considered a “mega deal”, and having then determined that there probably wasn’t enough deal activity to keep me busy in Transportation, you suggested that we should expand the role to also cover the remainder of GCI as well as the Financial Services and Public Sector business units.
Tony Lehner then provided me with a position description for my new role on 5 March, some 4 weeks after our initial discussion on the restructuring. Tony also scheduled a meeting in Melbourne on 12 March to discuss with me the various remuneration packaging options that were being considered for my new role. That meeting was cancelled by Tony and it was not until my meeting with you in Melbourne on 1 April that remuneration packaging was discussed.
From that meeting I understand that you are proposing that I remain on the Executive Variable Compensation (EVC) plan, but that my personal objectives and APAC objectives are to be achievement of Orders in the Operating Plan for GI and Orders in the Operating Plan for APAC. This contrasts with the targets set in my previous position which included Orders, Revenue and Profit for GCI APAC and for Asia Pacific as a whole.
The role you are now offering me is limited to sales, specifically supporting large opportunity sales activities in Transportation (primarily) and in Financial Services. My role in relation to the large Transportation opportunities need not be any more burdensome than in my previous role as they are all handled by highly competent senior people in the GCI business. This constituted a small percentage (<20%) of my previous role.
The additional role you envisage for me in Financial Services appears from our conversation to be designed to cover for the inexperience or inadequacy of the executives and sales personnel in that Business Unit. This doesn’t play to my strengths or to the Unisys proclaimed go-to-market strategy of leveraging domain experience and going to market by industry. However dressed, the offered position is essentially a sales role. It is not a position I would be interested in applying for if I was outside Unisys and it is not remotely comparable with the substantive position I previously held.
Over the course of the last two months it has become increasingly clear that the offered role must be understood as a severe downgrading from my previous role. Whereas previously I had an active involvement in all “mega deals” in the GCI business unit, I also managed for the GCI business unit the Profit & Loss account, the Sales teams, the Delivery teams, recruitment, people management, reporting, outlooking, budgeting, planning and marketing.
My performance in carrying out the role of VP & GM GCI APAC has never been questioned in performance appraisals, and was rewarded with bonuses in 2006 and 2007 and letters of acknowledgement from Joe McGrath for my efforts.
The role of VP of Mega Deals cannot in any dimension be construed as commensurate with the role of VP & GM GCI APAC. I have no quarrel with the entitlements of Unisys to make or change any position that it likes, but in my particular circumstances the downgrading of the substantive role I previously held, and the absence of any reasonably comparable alternative, represents the repudiation of my contract of employment with Unisys and in the circumstances I accept that repudiation and seek the separation payment on termination provided for in the terms of my contract of service.
We need to discuss a mutually acceptable date for my departure which can be as mutually agreed or if agreement is not possible then as soon as reasonably possible. Obviously I wish to be consulted on the terms of any announcement to my colleagues and to the industry but have no wish for my departure to cause embarrassment to Unisys or to you.
I look forward to bringing this matter to a conclusion without delay and seek your active cooperation in that regard. I will not be

discussing this communication within the Company until after I have heard from you.

An exchange of emails and letters followed (see CB 201, 207, 210, 211 and 213) and on 24 April 2008 Mr Lehner wrote to Mr Whittaker saying, among other things:

As you are aware, we do not accept that there has been a repudiation of the contract and note that you have ceased providing services to Unisys effective 23 April 2008.
In accordance with the Workplace Relations Act we must now pay you your pro rata annual leave entitlements. This amount will be paid into your bank account, along with your pay up to and including the same date.[6]

[6]CB 213-215.

On 28 April 2008, Unisys deposited $40,000 into the plaintiff’s bank account.

I now turn to address the main issues in the proceeding.

The Main Issues
(i) The Repudiation

As I have already noted, in meetings on 7 and 11 February 2008 Mr Barkla told Mr Whittaker that Suzanne Carter would be taking over his position as VP and GM of Global Commercial Industries in Asia Pacific and that Mr Barkla saw the plaintiff in a role as the ‘big deal maker’ in the Transportation sector.

The plaintiff contends that the defendant’s conduct amounted to a repudiation of the contract of employment.

It is said that Unisys removed the plaintiff without his agreement from his existing position and purported to move him to a new job, which did not exist, and by so doing evinced the plain intention not to be bound by the existing contract. The plaintiff submits that after two months of unsuccessfully trying to have the proposed position, its responsibilities and remuneration defined, the plaintiff was entitled (as he did) to treat the defendant’s conduct as repudiatory, accept the repudiation and treat the contract as terminated by the defendant.

There is an issue between the parties as to the scope of the case put versus the claim advanced in the pleading. The defendant says that the proposition that the mega deal position did not exist was not pleaded. It is unnecessary to resolve this issue as the repudiation question can be determined on a narrower basis.

Before turning to compare the remuneration, status and responsibility of the former VP and GM position with the proposed mega deal position, I will set out the general principles governing the repudiation of an employment contract.

In Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd the High Court dealt with the different senses in which the term repudiation is used, and the majority (per Gleeson CJ, Gummow, Heydon and Crennan JJ) said, relevantly in the circumstances of this case,:

…it may refer to conduct which evinces an unwillingness or an inability to render substantial performance of the contract. This is sometimes described as conduct of a party which evinces an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with the party’s obligations. It be may termed renunciation. The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it…[7] (citations omitted)

[7](2007) 241 ALR 88 at [43]-[49]; Cf Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 at 641-642 per Brennan J, 657-658 per Deane and Dawson JJ.

It is clear from the above extract and other cases that an actual intention to repudiate is not necessary; the issue is resolved objectively by reference to the effect it would have on a reasonable person. [8] Hence the question becomes whether the conduct of the employer, judged objectively, evinced an intention to no longer be bound by the contract. Repudiation may also be established by conduct that evinces an intention to perform the contract only in the manner in which it suits that party to perform.[9]
[8]DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423 at 431; Loughridge v Lavery [1969] VR 912; Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 at 633-634, 644, 647-648 and 657-658; Tropeano v Riboni [2005] VSC 229 at [112]-[113]; Pacific Brands Sport & Leisure Pty Ltd v Underworks Pty Ltd [2006] FCAFC 40 at [102]; Sanpine Pty Ltd v Koompahtoo Local Aboriginal Land Council [2006] NSWCA 291 at [102]; Spencer v Dowling [1997] 2 VR 127 at 160 per Hayne JA, cited with approval by the Queensland Court of Appeal in Cook v CFP Management Pty Ltd (2006) 152 IR 358 at 362.
[9]Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 at 647-649 per Brennan J, Raymond Leonard La Fontaine v Peter Francis La Fontaine [2009] VSCA 305.

Whether there has been a repudiation in a particular case is a question of fact.[10]
[10]Woods v W M Car Services (Peterborough) Ltd [1982] ICR 693 at 698, 699-700 and 701-702.

Not every breach of contract is a repudiation and repudiatory conduct is not to be inferred lightly.[11] Repudiation may be evidenced by a single act or by an accumulation of conduct in circumstances where no individual act on its own constitutes a repudiation.
[11]Ross T Smyth & Co Ltd v T D Bailey Son & Co [1940] 3 All ER 60 at 71; Azzi v Volvo Car Australia Pty Ltd [2007] NSWSC 319 at [74].

A repudiatory breach does not automatically terminate the contract but confers an elective right of termination on the innocent party.

I note that, at least in England, there was once a rule that, in relation to contracts of employment, an exception applied such that repudiation in itself brought the contract to an end without any requirement for its acceptance.[12] But the doctrine of automatic termination of employment contracts is now out of favour. In Thomas Marshall (Exports) Ltd v Guinle[13] Megarry VC referred to the practical difficulties which might arise from the application of a doctrine of ‘automatic determination’ of employment contracts and judicial opinion in England has now swung against the doctrine.[14]
[12]Denmark Production Ltd v Boscobel Productions Ltd [1969] 1QB 699.
[13][1979] Ch 227.
[14]Gunton v Richmond-upon-Thames London Borough Council [1981] 1 Ch 448 at 467-9 per Buckley LJ and 474-5 per Brightman LJ; Rigby v Ferodo Ltd [1988] ICR 29 at 34-35. For a discussion of the two theories, see McMullen ‘A Synthesis of the Mode of Termination of Contracts of Employment (1982) 41 (1) Cambridge Law Journal 110 and Forsyth, ‘Automatic v Elective Termination Theory Revisited’ (1994) 7 Australian Journal of Labour Law 246.

In Australia the position is settled. In Automatic Fire Sprinklers Pty Ltd v Watson[15] the High Court preferred the elective approach rather than the doctrine of automatic termination. This position has been followed in subsequent cases[16] and recently confirmed by a majority of the High Court in Byrne v Australian Airlines Ltd.[17]
[15](19460 72 CLR 435 at 450-4, 461-3, 665-7.
[16]Consolidated Press Ltd v Thompson (19520 52 SR (NSW) 75; Australian National Airlines Commission v Robinson [1977] VR 87; Turner v Australasian Coal and Shale Employees’ Federation (1984) 6 FCR 177 at 191-193.
[17](1995) 185 CLR 410 at 427-428 per Brennan CJ Dawson and Toohey JJ.

A repudiatory breach may be retracted or cured by the party in breach, but only prior to the exercise by the innocent party of the right to terminate the contract.[18]
[18]Peter Turnbull & Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd (1953) 90 CLR 235 at 250 per Kitto J; Tullett Prebon (Australia) Pty Ltd v Simon Purcell [2008] NSWSC 852 at [26].

An election to terminate for breach puts an end to the contract from the time of its communication and thereafter the breach cannot be cured or retracted.[19] As at the end of the contract both the terminating party and the party in breach are released from all further performance of the contract,[20] though accrued rights and obligations remain intact.[21]
[19]Tanaka v Tokyo Network Computing Pty Ltd [2003] NSWSC 114 at [89].
[20]Holland v Wiltshire (1954) 90 CLR 409 at 416; Re Dingian; Ex parte Wagner (1995) 69 ALJR 284 at 290.
[21]Ettridge v Vermin Board of the District of Urat Bay [1928] SASR 124.

In the context of employment contracts, a significant diminution in remuneration, status or responsibility may constitute a repudiation. The degree of change necessary to constitute a repudiation has been variously described in the decided cases. In Quinn v Jack Chia (Australia) Limited[22] Ashley J looked to whether a change in duties and responsibilities was ‘profound’. In Brackenridge v Toyota Motor Corporation Australia Ltd[23] the Full Court of the Federal Court was persuaded that the change of duties and classification of the employee was ‘of such a degree’ that it should be held that Toyota had terminated the old contract and replaced it with a new contract.
[22](1992) 1VR 567 at 576.
[23](1996) 142 ALR 99 at 108.

While each case necessarily depends on its own facts, the judgment of Madgwick J in Westen v Union des Assurances de Paris[24] is instructive given that there are some parallels between the facts of that case and those in the present proceedings. In Westen, the applicant had been the manager of all claims for the NSW Branch and of a small staff which comprised that Branch’s ‘Claims Department’. He reported directly to the NSW Branch Manager and had his own personal secretary. He had important powers of final decision over the settlement of claims and had the final advisory role as a claims specialist in relation to significant claims in any Branch. The respondent merged with another insurance company and a reorganisation followed. The applicant was to be, in substance, the senior claims employee within a team led by a Mr Cummins, which would deal with business sourced from larger customers. There was no proposal to reduce the applicant’s salary, or to move him from his office, and he would still be called, a ‘Claims Manager’. However, in the result, the applicant:

•would not be the manager of all claims in NSW, nor in any real sense, of his own discrete staff;
•he would not report directly to the State Manager, because his Team Leader, Mr Cummins, would be interposed between them;
•he would not have his own personal secretary;
•he would not have power of final decisions over claims except by way of delegation in routine matters from his Team Leader; and
•he would not have the final advisory role to national top level management in relation to national claims.

[24](1996) 88 IR 259.

In these circumstances, Madgwick J concluded that the applicant was entitled to treat the contract of employment as breached in a fundamental way by the respondent:

The applicant perceived, and in my view correctly perceived, that there was a considerable change in the nature of the new position he was being offered. He was, in effect, to become a senior, specialist claims clerk, whose considerable experience and expertise might be available to other people outside his team, dealing with claims, but it would be at the option of those other people, to consult him or not. Continuing to call him a Claims Manager did not make him one.[25]

[25]Ibid at 261.

His Honour also referred with approval (subject to a gloss) to the following observation by the learned authors of the Law of Employment (3^rd Edition, Law Book Company 1990), Macken, McCarry and Sappideen (at p 188):

In the absence of a contract allowing it, the employer cannot force changes [of jobs or regrading] on an employee. An attempt to do so will involve the employer in breach of contract if the [employee] presses her or his requirements….

The gloss which his Honour put on the above statement is that:

….. this must not be taken to propound undesirable inflexibility: there must be some reasonable give and take. In a rapidly changing world, it would be uncommon for the parties to a contract of employment to envisage no change in aspects of the job. But employers’ perceptions as to what are the important aspects of jobs they have promised employees and later wish to change may not coincide with the perceptions of the employees, nor of independent observers, such as courts to which the employees might, in due course repair. Serious, non-consensual intrusions upon the status or responsibilities, as well as upon the remuneration, attaching to a job may well be held to amount to a repudiation of the contract of employment, and their actuality will not be denied merely by the retention of the job’s title. That is the drift and the tenor of cases such as Beck v Darling Downs Institute of Advanced Education (unreported, Supreme Court of Queensland, No 3865 of 1988, Dowsett J, 20 April 1990) and Quinn v Jack Chia (Australia ) Ltd (1991) 43 IR 91.[26]

[26]Ibid.

I respectfully adopt his Honour’s approval of the passage from Macken, McCarry and Sappideen and the gloss which his Honour put on it.

I now turn to apply these principles to the facts of this case.

Determining whether there was a repudiation of the contract requires that a comparison be made between the plaintiff’s former VP and GM position and the mega deal position offered.

At the time the plaintiff elected to accept what he described as Unysis’ repudiation of his employment contract (ie on 10 April 2008), the following aspects of the new role had been clarified (either in meetings or by correspondence):

•the new position was in the same responsibility band within the Unysis remuneration structure as the plaintiff’s former VP and GM position and hence Mr Whittaker’s base remuneration (of $550,609) was unaltered by the change in role;
•the plaintiff would continue to be eligible to participate in the EVC plan, though the personal performance benchmarks to qualify for bonus payments in the mega deal position had not been finalised;
•the scope of a ‘mega deal’ had been defined;
•the plaintiff’s reporting lines – to Mr Barkla with a ‘dotted line’ to Mr Houri – remained unchanged;
•the proposed role was not confined to the Transportation sector but would operate across all industry sectors across the Asia Pacific region; and
•Mr Whittaker had been provided with a position description in respect of the ‘AP Mega Deal Sales VP’.

I note that it is also clear that the plaintiff had the skill, responsibility and experience to undertake the new role.[27]
[27]Tx p 30, lines 20-26 and p 52, lines 8-10.

The essential issue in dispute concerns the content and status of the proposed role vis a vis the VP and GM position. I note that the plaintiff also contends that the proposed role would have resulted in a diminution in his remuneration, given the uncertainty surrounding the EVC plan benchmarks. For reasons which will become apparent I need not determine this issue.

At paragraph 19 of his witness statement[28] Mr Whittaker set out the elements of his VP and GM position. The position description of the proposed mega deal role is set out at CB 187-188. Messrs Whittaker and Barkla gave evidence about the content of the two roles.
[28]Exhibit A1.

There is a conflict in the evidence about the extent to which the new role was a subset of the plaintiff’s former VP and GM position.

Mr Whittaker describes the mega deal role as ‘merely a sales role’.[29] While acknowledging that client interaction and closing deals was common to both roles,[30] his evidence was that such work was not a substantial component of the work he had performed in the VP and GM role[31] and that the work of the new role only amounted to 20 per cent of the work of his former role.[32] Mr Whittaker saw the mega deal position as a downgrading of his previous role.[33]
[29]Tx p 23, line 1.
[30]Tx p 34, lines 20-21.
[31]Tx p 35, lines 25-27 and p 36, lines 13-27.
[32]Tx p 59, lines 20-23, p 62, lines 6-8 and p 67, lines 11-25.
[33]Tx p 51, lines 28-31.

In his affidavit of 28 October 2009, Mr Barkla says that ‘a large portion of Mr Whittaker’s duties in the VP and GM role consisted of sales and development functions’.[34] Mr Barkla disputed the proposition that the work entailed in the mega deal role was a small component (less than 20 per cent) of the plaintiff’s previous VP and GM role.
[34]Exhibit R3 at para 4.

I prefer Mr Whittaker’s evidence – both in respect of this particular issue and more generally in relation to what was said in the various conversations between Messrs Barkla and Whittaker – for four reasons.

First, Mr Whittaker gave his evidence in a frank and straightforward manner whereas Mr Barkla was not an impressive witness – he exhibited a reluctance to answer questions in a direct and responsive manner,[35] and descended into vagueness on occasion.[36] I also found Mr Barkla’s explanation of paragraph 6 of his affidavit of 5 June 2009 (where he asserts that Mr Whittaker ‘negotiated major agreements for Unisys with … Vodafone, Telecom NZ and Railcorp’) to be wholly unconvincing,[37] and his evidence about Mr Whittaker’s EVC plan targets in the mega deal role, to be somewhat disingenuous.[38]
[35]Tx p 102, lines 29-31, p 103, lines 1-26, p 114, lines 4-18, p 116, lines 17-25, p 117, lines 11-24, p 118, lines 19-28, p 122, liens 22-31 and p 123, lines 1-28.
[36]Tx p 96, lines 20-31 and p 97, lines 1-5.
[37]Tx p 150, lines 12-31, p 151 and p 152, lines 1-17.
[38]Tx p 146, lines 9-31, p 147, lines 1-31 and p 148, lines 1-24.

Second, Mr Barkla acknowledged that he had never worked out, in percentage terms, the amount of time that the plaintiff would have spent negotiating and closing deals.[39]
[39]Tx p 149, lines 15-26.

Third, Mr Whittaker took notes at his meetings with Mr Barkla whereas Mr Barkla did not.[40]
[40]Mr Barkla, Tx p 112, lines 5-9.

The fourth and final reason why I prefer Mr Whittaker’s evidence is that the evidence leads to an inference that Mr Barkla did not have a clear idea of the work performed by the plaintiff in the VP and GM position. In his affidavit of 5 June 2009, Mr Barkla says:

From my observations, Mr Whittaker possessed the skills necessary to secure major deals for Unisys. He was a successful negotiator of deals who negotiated major agreements for Unisys with, among others, Travel Sky, Cathay Pacific, IATA, Vodafone, Telecom NZ and Railcorp.[41]

[41]Exhibit R2 at para 6.

Contrary to Mr Barkla’s evidence, Mr Whittaker says that the Vodafone, Telecom NZ and Railcorp deals were all closed by the business unit which he headed up but that he had no involvement in the negotiation of those deals whatsoever.[42] In his closing submissions, Mr Fernon pointed to the accomplishments section of Mr Whittaker’s 2007 performance review in support of the contention that contrary to Mr Whittaker’s evidence, he had in fact negotiated deals with Vodafone, Telecom NZ and Railcorp.[43] Two things may be said about this submission.
[42]Tx p 19, lines 1-9.
[43]Tx p 218 lines 6-21, p 263 lines 19-31 and p 264 lines 1-6.

The first is that the document relied upon does not support the contention put. The document says, relevantly:

Overall another very strong year in China with TravelSky, where we are very strongly placed following threats from Amadeus IBM in 2006. In addition we have had very significant wins at IATA, Vodafone and Telecom NZ which position our business very well for the future.
Innovative thinking at Railcorp moved us from ad hoc body shopping to landing a ground breaking ECM engagement that will be the starting point for a significant practice in APAC.[44] (emphasis added)

[44]CB 129.

The words ‘we’ and ‘us’ are clearly used as a reference to the business unit as a collective entity, rather than necessarily denoting any individual involvement by Mr Whittaker. This is consistent with Mr Whittaker’s evidence about his involvement in the negotiation of these deals. The use of ‘we’ and ‘us’ may be contrasted with the language used where the plaintiff has been directly involved in a negotiation. For example in his 2006 performance review Mr Whittaker says:

… in China … I have been required to hold a series of very delicate negotiations with the Government in relation to Travel Sky … I have also been required to undertake delicate negotiations with senior management at Qantas as part of our MIPS deal that was signed in December.[45] (emphasis added)

[45]CB 130.

Similarly, the 2005 performance review says:

… In China I was personally involved in closing the Travel Sky Darado deal ($34m) and Beijing Airport Terminal 3 deal ($12m) … In Australia I have been personally engaged in developing our relationships with Qantas, Flight Centre, Queensland Rail and Melbourne Airport.[46] (emphasis added)

[46]CB 142.

The second thing that may be said about Mr Fernon’s submission is that it was only indirectly put to Mr Whittaker. The plaintiff was asked questions about his involvement in other deals, but he was not directly cross‑examined about his involvement in the Vodafone, Telecom NZ and Railcorp deals. Only passing mention was made of the accomplishments section of Mr Whittaker’s 2007 performance review:

Mr Fernon:

… Mr Whittaker, a similar performance plan and reviews documents appears commencing at p 129, correct? Is that so?

Mr Whittaker:

Correct.

Mr Fernon:

And again you set out your accomplishments at p 129 in respect of that period?

Mr Whittaker:

That’s correct.[47]

[47]Tx p 30, line 31 and p 31 lines 1-4.

There was no direct challenge to Mr Whittaker’s evidence about his lack of direct involvement in the negotiation of the Vodafone, Telecom NZ and Railcorp deals.

I accept Mr Whittaker’s evidence in respect of this issue and find that he had no involvement in the negotiation of the Vodafone, Telecom NZ and Railcorp deals.

In terms of the relative status and responsibility of the two roles I find as follows:

(i)The mega deal role was a 12 month job with no guarantee that it would continue after that time.[48]
(ii)The work entailed in the mega deal role was a subset of the work previously performed by Mr Whittaker and amounted to about 20 per cent of the work of his former VP and GM role.[49]
(iii)In the proposed role the plaintiff would have no responsibility for the management of a profit and loss account. The partner seniority bands within Unisys reflected the size of the profit and loss account controlled by the partner. A partner band 3 ran a profit and loss account in excess of $US50 million, whereas a partner band 2 was responsible for a profit and loss account in excess of $US250 million.[50]
(iv)No specific budget or resources had been allocated to the mega deal position.[51] Mr Whittaker would have to go to Mr Barkla to get the resources he needed to enable him to perform the proposed new role.[52]
(v)In the new role Mr Whittaker would no longer be part of the Australian, New Zealand and Asia Pacific leadership teams.[53] Mr Whittaker describes the function of these leadership teams in the following terms:
The constitution of the leadership team was the heads of all the business units; so the industry groups, the global outsourcing, infrastructure services, the systems and technology group, as well as all the support businesses; so, group legal, HR, finance, et cetera. And the group would meet on a regular basis to determine the strategy for the year for the Asia Pacific region to determine priorities in terms of how we were going to achieve our operating plan and to review the results of the Asia Pacific business as a whole.[54]
(vi)Mr Whittaker had eight direct reports in his previous VP and GM role[55] whereas there was only one direct report to the mega deal position (from the team leader in China) and no directs reports in Australia were assigned to the new role.[56]
(vii)The new role involved negotiating and closing strategically significant deals. Project delivery did not form any part of the new role. The project delivery phase of a sale may extend over a number of years and it is also a source of revenue to Unisys.[57] Project delivery was an element of the ‘profile’ of an employee in Mr Whittaker’s responsibility band. The position profile of a partner 3 level with Unisys is set out at CB 225. The ‘Partner Profile’ is in the following terms:
A partner is entrepreneurial by nature, with a demonstrated capability to build and grow a professional services or outsourcing practice. A partner is able to recruit and develop professionals at all levels, identify potential client opportunities, and successfully manage both the selling and profitable delivery of Unisys services. A partner is recognised both inside Unisys and within his/her area of specialization as a leader and role model, consistently exercising sound business judgment. He/She conveys a significant executive presence, a high level of professionalism and a focused commitment to excellence. He/She maintains absolute integrity while balancing the potentially conflicting objectives of exceeding client expectations of quality and value, appropriately developing professionals within his/her practice and achieving Unisys financial objections. He/She utilizes a collaborative working style that stresses teamwork and places the best interests of Unisys over individual and team objectives. (emphasis added)

[48]Mr Barkla, Tx p 111, lines 30-31, p 112, line 1, p 119, lines 14-25. I note that all of the senior executive roles were to be reviewed in 12 months: Tx p 154, lines 6-9.

[49]Tx p 59, lines 20-23, p 62, lines 6-8 and p 67 lines 11-25. I note that in his former VP and GM position Mr Whittaker dedicated more than 20 per cent of his time to the Mainland China market (Tx p 25, lines 23-26) but that is not inconsistent with the finding in para 69(ii) above because not all of the time Mr Whittaker spent in China was dedicated to sales – he focussed on project delivery, managing people and managing the profit and loss account (Tx p 60, lines 18-28).

[50]Tx p 21, lines 2-10 and p 22, lines 16-28.

[51]Mr Barkla, Tx p 162, lines 16-22, p 163, lines 18-20 and p 169, lines 10-11.

[52]Mr Barkla, Tx p 155, lines 26-31.

[53]Mr Barkla, Tx p 170, lines 7-11.

[54]Tx p 69, lines 20-30.

[55]Mr Barkla, Tx p 156, lines 4-6.

[56]Mr Barkla, Tx p 145, lines 28-31, p 171, line 31 and p 172, lines 1-15.

[57]Mr Barkla, Tx p 93, lines 20-27.

The defendant contends that the offer of the ‘mega deal’ position did not constitute a repudiation of the plaintiff’s contract of employment. There are two limbs to the defendant’s contention. The first is that the proposed role was supported by an express term of the plaintiff’s contract.

The contract of employment provided:

As Unisys is a global organisation, flexibility and mobility are inherent in all job descriptions/job requirements. As such, employees may be requested to perform duties at locations other than the main place of employment. In addition, from time to time, employees may also be required to perform other duties that are within the limits of their skill base, competence and training.[58]

[58]CB 20.

It is submitted that this clause entitled the defendant to request or direct the plaintiff to perform the duties of the mega deal position, irrespective of whether the role was comparable to his former VP and GM role. This is put on the basis that the work the plaintiff was to do in the ‘mega deal’ role was work for which he had the skill base, competence and training and the work proposed was part of a 12 month project, thereby satisfying the requirement that the employee can be required to perform ‘other duties’ from ‘time to time’.

Mr Fernon submitted that this aspect of the plaintiff’s contract constituted ‘game, set and match’ for the defendant because the contract expressly provided that ‘from time to time, employees may also be required to perform other duties that are within the limits of their skill base, competence and training’.

It seems to me that the provision relied upon contains three conditions on Unysis’ right to require Mr Whittaker to perform a role such as the mega deal position:

(i)the duties must be within the limits of his ‘skill base, competence and training’ – it is common ground that this requirement is met here having regard to Mr Whittaker’s skills, competence and training, and the requirements of the mega deal role;
(ii)there is a temporal limitation in that the employer can only require the performance of other duties ‘from time to time’ – this requirement is arguably met in this case because the mega deal role was only proposed for a limited period of 12 months; and
(iii)the employee can only be required to perform ‘other duties’.

I am not persuaded that the last condition is met in this case. This clause allows Unysis, in certain circumstances, to require Mr Whittaker to perform ‘other duties’. The word ‘other’ qualifies the type of duties which Mr Whittaker can be required to perform. The Macquarie Dictionary says that ‘other’ means ‘additional or further; different or distinct from the one or ones mentioned or implied’. In the context of this provision, it means that if the first two conditions are met, Mr Whittaker can be required to perform duties other than the duties of his present role.

The clause is not intended to authorise the assignment of an employee to a new role, encompassing only some of the duties of his current role. It is not intended to facilitate the contraction of an employee’s current role. Contrary to Mr Fernon’s submission, this clause is no answer to the plaintiff’s claim.

The second limb to the defendant’s contention is that the requirement that the plaintiff undertake the ‘mega deal’ role did not evince an intention to no longer be bound by the contract and hence did not constitute a repudiation.

Mr Fernon submitted that the various performance review documents relating to Mr Whittaker provide an independent assessment of his work and the objective of his work for the year in review. It is submitted that these documents show that the objective of the plaintiff’s work was ‘plainly consistent with the type of role he was being asked to do in the Mega Deal function’. This is said to be ‘an important matter’.[59]
[59]Tx p 218 at lines 3-5.

I am not persuaded that these matters are significant, for two reasons.

First, an examination of Mr Whittaker’s performance reviews for 2006 and 2007[60] shows that the plaintiff’s performance is assessed against seven separate business objectives, namely:
[60]See CB 138-141 and 129-137 respectively.

•Business Development and Client Relationship Management;
•Customer Satisfaction;
•Service Delivery – Demand Planning;
•Talent Management;
•Talent Development;
•Risk Management; and
•Knowledge Management.

While the first (and possibly the second) objective may be seen to be common between the two roles, it is far from apparent that the remaining objectives would be applicable to the new role. The evidence did not deal with the correlation between the business objectives set out in the plaintiff’s past performance reviews and the content of the proposed mega deal position. Nor did Mr Fernon’s submissions deal with this issue in any particularity, rather the argument was advanced as a broad proposition.

What is clear from the evidence is that in the new role, Mr Whittaker would not be involved in the delivery of projects and he would only have one direct report (as opposed to eight direct reports in his former VP and GM role). It would seem to follow that the objectives of ‘Service Delivery – Demand Planning’, ‘Talent Management’ and ‘Talent Development’ would assume much less significance in the new role.

It should also be noted that the performance review documents also set out four ‘People Objectives’, including ‘Managing Low Performance’ and ‘Retention’. These matters would also be likely to assume much less significance in the new role as Mr Whittaker would only have one direct report.

Hence, contrary to Mr Fernon’s submissions, an analysis of Mr Whittaker’s past performance reviews supports the proposition that there was a substantial difference between the former VP and GM position and the proposed mega deal role.

Second, the evidence does not support Mr Fernon’s contention that Mr Whittaker conceded that the ‘accomplishments’ section in his performance reviews was a statement of the work that he had performed in the year subject to review. Viewed fairly and in totality, Mr Whittaker’s evidence is that the performance review was merely a summary of the achievements for the year, not a summary of the work completed during the year.[61] He expressly rejected the proposition that the negotiating and closing of deals was a substantial part of the work he performed up to February 2008.[62] I note that earlier in his evidence, Mr Whittaker conceded that the performance review set out work that he had done but he did not say that it reflected all of the work he had done in the year under review.[63]
[61]Tx p 36, lines 10-12.
[62]Tx p 35 lines 25-31, p 36 lines 3-29.
[63]Tx p 27 lines 27-29, p 30 lines 23-29 and p 31 lines 5-9.

I am satisfied that the mega deal position constituted a substantial diminution in status and responsibility when compared to the plaintiff’s former VP and GM role. In his former role Mr Whittaker had been responsible for a profit and loss account and running one of the three business units within Unysis’ Asia Pacific operation. He managed a budget and had eight direct reports. The plaintiff was then unilaterally removed from that position[64] and offered a senior specialist role in which he would be responsible for negotiating and closing ‘mega deals’. No specific budget or resources had been allocated to the proposed role. He would have only one direct report and no responsibility for the management of a business unit or a profit and loss account.
[64]Tx p 118 lines 19-28.

I am satisfied that the removal of the plaintiff from the VP and GM position and the offer of the mega deal position constituted a repudiation of his contract of employment. By its actions, Unysis evinced a plain intention not to be bound by the existing contract.

(ii) The Notice Claim

The letter of offer includes a section headed ‘Leaving the Company’, in the following terms:

If Unisys wishes to terminate this agreement as a result of the position becoming redundant or for any reason relating directly or indirectly to Unisys restructuring or merging or amalgamating its business with any other organisation or entity, then Unisys will give six (6) months notice of termination or six (6) months pay in lieu of notice.
This agreement may otherwise be terminated by either party at any time by giving three (3) months notice in writing. Unisys will have the option to pay three (3) months pay in lieu of notice.
If your actions at any time constitute serious misconduct, Unisys may end this contract immediately without notice.

The plaintiff contends that the changes communicated in the email broadcast of 12 February 2009 constituted a restructuring of the defendant’s business and as a consequence, Mr Whittaker was made redundant.

The defendant says that there was no redundancy. Ms Carter continued in the VP and GM position formerly occupied by Mr Whittaker. It is also submitted that there is no termination pleaded as a result of restructuring, rather the plaintiff’s claim is that the termination of his employment arose from redundancy. But in any event, the defendant says that there was no restructuring in this case as the relevant clause is concerned with terminations resulting from Unysis’ ‘restructuring … its business with any other organisation or entity’. The defendant contends that the clause is not concerned with the internal restructuring of some positions, but rather with the restructuring of the business with another organisation or entity. It is also submitted that, in this case, the employer did not wish to terminate Mr Whittaker’s employment, rather it wished that his employment would continue, albeit in a different role, and hence the clause does not apply.

It is convenient to deal first with the proposition that Mr Whittaker’s employment was terminated as a result of redundancy.

The defendant contends that an essential feature of redundancy is that the particular position occupied by the employee ceases to exist for reasons such as economic downturn or restructuring. It is said that the focus is on the position not the person, and that in this case the plaintiff’s position, as VP and GM, did not cease to exist. Ms Carter took the plaintiff’s VP and GM role and Mr Whittaker was offered the mega deal role. In these circumstances, it is said that there was no redundancy. A number of authorities are relied on in support of this proposition.

In R v Industrial Commission of South Australia; Ex parte Adelaide Milk Co‑operative Ltd, Bray CJ defined redundancy in these terms:

… the concept of redundancy in the context we are discussing seems to be simply this, that a job becomes redundant when the employer no longer desires to have it performed by anyone.[65]

[65](1977) 16 SASR 6 at 8.

As the defendant observes, this description of redundancy was referred to with apparent approval by the Full Bench of the Australian Industrial Relations Commission in the Termination Change and Redundancy Case (the TCR case)[66] and by Beach J in Lindeman v Bentley.[67] But these cases do not assist the defendant; they are not concerned with the definition of redundancy at common law. The TCR case was about the creation of a standard redundancy provision for inclusion in federal awards. In Lindeman v Bentley, Beach J was construing a Victorian Public Sector Agreement titled ‘Redeployment and Retraining in the Victorian Public Service’. Clause 3 of that agreement defined redundancy in terms of positions, not persons.
[66](1984) 8 IR 34 at 56.
[67]Unreported, Supreme Court of Victoria, 8 December 1989.

The same observation may be made of the judgments in Foster’s Group Limited v Wing.[68] In that matter, the Victorian Court of Appeal was concerned with the application of Foster’s redundancy policy which defined redundancy in these terms:

A redundancy arises when an employee’s role no longer exists or the duties of the role have changed that for all practical purposes the original role no longer exists.

[68](2005) 148 IR 224.

I am not persuaded that the concept of redundancy at common law is as narrow as the defendant contends. It is not simply concerned with the abolition of a position, but may arise upon the redistribution of job functions. As Beazley J observed in Quality Bakers of Australia Ltd v Goulding:[69]

A redundancy will arise where an employer has labour in excess of the requirements of the business; where the employer no longer wishes to have a particular job performed; or where the employer wishes to amalgamate jobs. It is not necessary for the work to have disappeared altogether. As was said in Bunnett’s case:
‘Organisational restructuring may result in a position being abolished and the functions or some of them being given to another or split amongst others’. (citations omitted)

[69](1995) 60 IR 327 at 332-333.

Hence a redundancy may arise where the duties performed by an employee are redistributed among other employees. The employer still requires the duties to be performed, but the re‑organisation gives rise to a redundancy. The plaintiff says that that is what happened here:

Mr Whittaker’s former position, that is the bundle of duties that comprised his position were redistributed among the two persons (Mr Whittaker and Ms Carter).[70]

[70]Tx p 230 at lines 23-25.

I accept that the duties that made up Mr Whittaker’s former GM and VP role were redistributed between Ms Carter and Mr Whittaker. But I do not accept that Mr Whittaker was made redundant as a result. As Ryan J observed in Jones v Department of Energy and Minerals:

… it is within the employer’s prerogative to rearrange the organisational structure by breaking up the collection of functions, duties and responsibilities attached to a single position and distributing them among the holders of other positions, including newly created positions. … One illustration of it occurs when the duties of a single, full time, employee are redistributed to several part time employees. What is critical for the purpose of identifying a redundancy is whether the holder of the former position has, after the reorganisation, any duties left to discharge. [71] (emphasis added)

[71](1995) 60 IR 304 at 308.

In Jones, some of the tasks previously assigned to the applicant still had to be carried out, but as a consequence of the employer’s rearrangement of its operational structure, these tasks were combined with other functions and performed by the holder of a newly created position. Mr Jones was rendered redundant when he could not be redeployed and was found to be surplus to the respondent’s personal needs.

The situation in the present case is quite different. Unysis rearranged its operational structure by splitting the functions of Mr Whittaker’s former GM and VP role between Mr Whittaker and Ms Carter. But, importantly, after the reorganisation Mr Whittaker still had duties to perform. Contrary to the plaintiff’s submission, I am not persuaded that the mega deal position did not exist – the weight of the evidence supports the existence of such a role. A position description in respect of the proposed role was drawn up and forwarded to Mr Whittaker and the position is referred to in the organisational chart on p 6 of Exhibit R7. Further, in his letter to Mr Barkla of 10 April 2008, Mr Whittaker describes the proposed position as ‘essentially a sales role’ which he saw as a severe downgrading of his previous role. But Mr Whittaker does not say that the proposed role was a sham or did not exist. While the mega deal position has not yet been filled, that is explicable on the basis that a person with the requisite skills has not yet been identified.[72]
[72]Tx p 99, lines 23-29, p 172, lines 19-31 and p 173, lines 1-12.

In such circumstances, and consistent with what Ryan J said in Jones, Mr Whittaker was not redundant.

In the alternative, the plaintiff says that the termination of his employment was a consequence of the restructuring of Unysis’ business.

Contrary to the defendant’s submission I am not persuaded that the plaintiff is precluded from advancing this point because it was not pleaded. While not a model of clarity, the statement of claim, properly understood, did advance the proposition that the plaintiff’s employment was terminated for a reason which related to the restructuring of the defendant’s business. In any event, it cannot be said that the defendant was denied procedural fairness because of some lack of clarity in the statement of claim. It is apparent from the amended defence filed on 4 June 2009 that the defendant was alive to the restructuring claim. At paragraph 12A of that document the defendant says:

In further answer to paragraphs 7 – 12 of the Statement of Claim, if, which is denied, the Defendant restructured its business operations as alleged in paragraph 7 of the Statement of Claim, the Defendant denies that the Plaintiff is entitled to the payments for which the contract of service provided in circumstances of redundancy, as alleged in paragraph 11(b) of the statement of claim, as the entitlement to such payments is conditional upon the Defendant restructuring its business with another organisation or entity, which restructuring did not occur.

The defendant advanced the same submission in oral argument and in its written outline (at para 41). In essence, the defendant contends that the ‘restructuring’ referred to in the relevant contractual provision is limited to restructuring with another organisation or entity.

The relevant provision speaks of a termination of employment ‘for any reason relating directly or indirectly to Unysis restructuring or merging or amalgamating its business with any other organisation or entity’. The Macquarie Dictionary says that ‘restructuring’ means ‘to change the organisation or structure of; in business, manufacturing etc., to change the pattern of employment, distribution etc especially when this results in job losses’. It is used to describe the reorganisation of an existing structure. In the context of this provision, ‘restructuring’ refers to a reorganisation of the existing Unysis structure. It is an activity internal to Unysis. By contrast, the ordinary meanings of the words ‘merging’[73] and ‘amalgamating’[74] refer to activities in concert with another organisation or entity. Hence a distinction may be drawn between restructuring on the one hand and merging or amalgamating on the other. For this reason I am not persuaded that the word ‘restructuring’ in this provision is qualified by the expression ‘with any other organisation or entity’. That expression qualifies the words ‘merging’ and ‘amalgamating’ but not the word ‘restructuring’.
[73]Macquarie Dictionary: ‘to unite or combine’.
[74]Macquarie Dictionary: ‘to mix so as to make a combination; blend; unite; combine: to amalgamate two companies’.

The issue for determination is whether there was a ‘restructuring’ within the meaning of the relevant provision. Did the changes announced in the email broadcast of 12 February 2008 amount to a ‘restructuring’ within the meaning of the contractual provision? Or, are those changes to be characterised as a ‘realignment of position descriptions and duties of some senior executives in order to take advantage of areas of demand in the Asia Pacific region’ (as contended by Mr Barkla)?[75]
[75]Exhibit R1 at para 17.

The changes announced in the broadcast email related to the composition and duties of the senior leadership team within the Asia Pacific Global Industries business unit. In particular, Ms Carter was promoted to Vice President, Commercial Industries, Unisys Asia Pacific and Mr Toh Cooper was appointed Asia Pacific Global Industries Operations Manager. The changes included the creation of the new senior mega deal position,[76] which Mr Whittaker was ‘asked to step into’, and all of the positions affected were very senior and reported directly to Mr Barkla.
[76]Mr Barkla Tx p 96 lines 11-14.

The VP and GM role also changed with the changes to the senior leadership team announced on 12 February 2008. The role to which Ms Carter was promoted was not the same role that the plaintiff had performed in that position because the mega deal position subsumed some of the work previously done by Mr Whittaker when he was in the VP and GM role.[77]
[77]Mr Barkla, Tx p 102, lines 29-31, p 104, lines 1-24.

In his evidence Mr Lehner (the Human Resources Director Asia Pacific of the defendant) acknowledged that these changes amounted to ‘a reasonably big change’.[78]
[78]Tx p 191, lines 10-13.

I am satisfied that these changes constituted a restructuring within the meaning of the relevant contractual provision.

The final argument advanced on behalf of the defendant was that, even if it could be said that the termination of Mr Whittaker’s employment was related ‘directly or indirectly to Unisys restructuring’, it was not the wish of the defendant that the employment agreement terminate, hence the relevant clause did not apply and the plaintiff is not entitled to six months pay in lieu of notice.

This proposition rests on a literal reading of the opening words of the relevant provision: “If Unisys wishes to terminate this agreement as a result of … “ (emphasis added).

But the construction of an employment contract does not begin and end with the literal meaning of contractual provisions. The court approaches the task of ascertaining the meaning of the parties’ expressions from an objective point of view. In the case of a disputed clause in a commercial agreement, ‘the essential question is what would reasonable business people in the position of the parties have taken the

clause to mean’.[79] The court approaches this task in a ‘commonsense, non-technical way’.[80] As Lord Diplock said in Antaios Compania Naviera SA v Sales Rederierna AB,:
… if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business commonsense, it must be made to yield to business commonsense.[81]

[79]Schenker & Co (Aust) Pty Ltd v Maplas Equipment and Services Pty Ltd [1990] VR 834 at 840 per McGarvie J; cited by Weinberg J in McCormick v Riverwood International (Australia) Pty Ltd (1999) 167 ALR 689).

[80]MLW Technology Pty Ltd v May [2005] VSCA 29 at [70].

[81][1985] AC 191 at 201.

In this case, the construction contended for by the defendant would mean that an employee would not be entitled to the benefit of the clause if their employment was terminated as a result of economic necessity (eg redundancy due to adverse trading conditions), in the circumstances where the employer did not subjectively wish to terminate the agreement.

Ascertaining the meaning of an expression in an employment contract must rest on the premise that the contract was made in good faith with the object of at least potential mutual benefit by due performance.[82]
[82]McCormick v Riverwood International (Australia) Pty Ltd (1999) 167 ALR 689 at 702 [74] per Weinberg J.

The construction contended for by the defendant flouts common sense and would allow the subjective intent of one party to rob the other of the benefit of a contractual provision. The clause must operate on the basis of the defendant’s actions, objectively ascertained, and not its subjective intent. Nor can the clause be construed such that it excludes terminations resulting from the defendant’s repudiatory conduct. The clause is to be read as meaning, relevantly in the context of this case,:

If Unisys’ actions result in the termination of this agreement … for any reason relating directly or indirectly to Unisys restructuring … then Unisys will give six (6) months notice of termination or six (6) months pay in lieu of notice.

On this construction, the plaintiff is entitled to six months’ pay. Unisys’ repudiatory conduct resulted in the termination of the agreement for reasons related to the restructuring of its business.

(iii) The Redundancy Claim

The plaintiff relies upon the document headed ‘Unisys Australia Redundancy/Retrenchment Policy’ (‘the Redundancy Policy’)[83] and contends that it formed part of his contract. In his evidence the plaintiff deals with the policy at paragraph 13 of his witness statement (Exhibit A1).:

During the course of my employment and as early as 2002 I was aware of and had reason to be familiar with the Company’s redundancy/retrenchment policy. As part of my management role I had cause to effect the redundancies of several positions and on each occasion severance was paid and calculated in accordance with the Company’s redundancy/retrenchment policy.

[83]CB 220-222.

The plaintiff contends that the question is whether, objectively, a reasonable observer would have understood that the Redundancy Policy was promissory. It is submitted that the policy was incorporated into the plaintiff’s contract on the same basis as a similar document was in Ajax Cooke Pty Ltd v Nugent,[84] and the plaintiff also relies upon Vroon BV v Fosters’ Brewing Group Ltd,[85] MLW Technology Pty Ltd v May[86] and Lighting by Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd.[87]
[84](1993) 5 VIR 551 per J.D. Phillips J (‘Ajax Cooke’).
[85][1994] 2 VR 32 at 67 per Ormiston J
[86][2005] VSCA 29 at [76] per Gillard AJA, Winneke P and Buchanan JA agreeing.
[87][2008] WASC 23 at [21] – [23] and [204] – [205].

In relation to contextual matters, the plaintiff submits that the letter of offer requires reference to the policy in order to be understood. It is said that the letter of offer and the Redundancy Policy need to be read together for ‘redundancy’ under the letter of offer, to have any meaning.

In the alternative, the plaintiff contends that the contract incorporates the Redundancy Policy by reference. In this context the plaintiff relies on Riverwood International Australia Pty Ltd v McCormick[88], and Goldman Sachs J B Were Services Pty Limited v Nikolich[89].
[88](2000) 177 ALR 193 per Lindgren, North and Mansfield JJ (‘Riverwood’).
[89][2007] FCAFC 120 at [30] per Black CJ; at [121] per Marshall J and at [285]-[286] per Jessup J (‘Nikolich’).

I am not persuaded that the Redundancy Policy formed part of the plaintiff’s employment contract, but even if it did, the plaintiff is not entitled to any severance payment pursuant to the policy because such payments are only made in situations of ‘retrenchment’.

Turning to the first of the propositions advanced on behalf of the plaintiff it is submitted that the policy was incorporated into the contract on the same basis as a similar document was in Ajax Cooke.

In Ajax Cooke, a redundancy agreement had been reached between the employer and a number of unions on the terms of a redundancy package for its employees. The agreement was to remain in force for one year from 4 September 1990 and a notice was posted by the employer in the workplace to inform its employees of the agreement reached. That notice was headed ‘Redundancy Package – Australia’ and declared at the outset that ‘the following arrangements will apply to employees of Ajax Spurway Fasteners’.[90] The notice then set out in detail the benefits to be accorded to those who were retrenched after being made redundant.
[90]At the time Ajax Cooke Pty Ltd was trading as Ajax Spurway Fasteners.

On 18 July 1991, during the period of operation of the redundancy agreement, Nugent, an employee of Ajax Cooke, was made redundant and paid certain sums for ‘redundancy’, but claimed that he had not been paid all that was due to him under the terms of the redundancy package. Nugent successfully sued in the Magistrates’ Court for the balance of what was said to be owing to him and the employer appealed to the Supreme Court.

The central issue before Phillips J was whether the redundancy agreement formed any part of Nugent’s contract of employment with Ajax Cooke. His Honour held that it did:

In my opinion, the notice containing the terms and conditions of the redundancy package was an offer to the plaintiff (among others) on condition: if the plaintiff continued in his employ until retrenchment then, if retrenchment occurred during the currency of the agreement, the benefits spelled out in the redundancy package would be paid by the employer … According to the evidence, the plaintiff read the notice when it was posted, considered that it applied to him and must therefore have continued in employment thereafter in the belief that he would be paid according to its terms if he continued in employment and became redundant. In all the circumstances, then, the plaintiff’s continuing in employment until he was retrenched was both the acceptance of his employer’s offer and the consideration necessary to make the resultant agreement enforceable by him.

It can be seen that his Honour adopted the classical approach of offer and acceptance in determining the content of the relevant agreement.

But the facts in that case are quite different from the circumstances in the present matter. Here the policy in question contains no general statement that it applies to all employees of Unysis and there is no evidence to the effect that the policy was generally brought to the attention of all Unisys employees by, for example, a broadcast email of the type used to communicate the change in Mr Whittaker’s role.

The fact that Mr Whittaker, in his management role, effected the redundancies of several positions and on each occasion severance was paid in accordance with the policy, is not decisive. There is no evidence about the terms of the particular contracts of employment of the retrenched employees.

Nor do the highlighted passages from the others cases relied upon carry the plaintiff the required distance. Those cases are authority for the following general propositions:

(i)In commercial transactions, the court should strive to give effect to the expressed arrangements and expectations of those engaged in business, notwithstanding that there are areas of uncertainty and notwithstanding that particular terms have been omitted or not fully worked out. But the courts will not enforce an incomplete agreement and there can be no binding and enforceable obligation unless the terms of the bargain, or at least its essential or critical terms, have been agreed upon.[91]
(ii)In construing contracts between businessmen and their actions the court should proceed in a commonsense, non technical way and ask how businessmen would construe their agreement in the light of the commercial purpose and setting.[92]
(iii)A contract may be inferred from the acts and conduct of the parties, as well as or in the absence of their words, it need not necessarily be detected using the classical theory of contract based upon offer and acceptance.[93]

[91]Vroon BV v Foster’s Brewing Group Ltd [1994] 2 VR 32 at 67.

[92]MLW Technology Pty Ltd v May [2005] VSCA 29 at [76] per Gillard AJA, Winneke P and Buchanan JA agreeing.

[93]Lighting by Design (Aust) Pty Ltd v Cannington Nominees Pty Ltd [2008] WASC 23 at [21]-[23] and [204]-[205]; Vroon BV op cit.

These statements of principle are unexceptional, but do not assist the plaintiff in his contention that the redundancy policy was incorporated into his contract of employment.

I note that in relation to contextual matters, the plaintiff submits that the letter of offer requires reference to the policy in order to be understood. This is put on the basis that the letter of offer uses the term ‘redundancy’ but does not define it.

There is no substance to this point. Redundancy has a discernible meaning at common law, it is not necessary that it be defined in the contract, just as the term ‘restructuring’ is not defined. The plaintiff also faces the difficulty that the letter of offer is dated 30 January 2002 and there is no evidence that the policy was in existence at that time. The most that can be said is that during the course of his employment and as early as 2002, Mr Whittaker was ‘aware of and had reason to be familiar with’ the policy because he had cause to effect the redundancies of several positions. But such awareness must necessarily have arisen after he commenced employment on 12 March 2002.

I now turn to the plaintiff’s contention that his contract incorporates the Redundancy Policy by reference. The plaintiff points to the following matters in support of his contention:

•the letter of offer says that it sets out the ‘principal conditions and benefits’;
•the term ‘redundancy’ is used in the letter but not defined and is only defined in the Redundancy Policy. It is said that this makes clear that the letter of offer and the policy are to be read together; and
•the policy states that an employee will be paid in lieu of notice, either on the terms set out in the policy or under their contract of employment, whichever is the greater, up to a maximum of 52 weeks. This is said to suggest a plain intention that the policy have contractual effect.

These matters do not persuade me that the parties intended to incorporate the Redundancy Policy into the contract.

I note at the outset that the letter of offer, while not expressed to be exhaustive of the terms of the contract, makes no reference to the Redundancy Policy. Yet there is express reference to other policies. Under the heading ‘Employment Policies’ there is express reference to the Unisys Diversity Plan and to the following policies:

•Employee Agreement Business Practices Policy;
•Employee Agreement as to Patents, Inventions and Other Creative Property Rights Regarding Competitive Activities; and
•Internet Acceptable Use Policy.

These policy documents were included in Mr Whittaker’s ‘Employee Pack’ and he was asked to sign them.

By way of contrast, there is no express reference to the Redundancy Policy in the letter of offer and no evidence to suggest that a copy of the policy was provided in Mr Whittaker’s ‘Employee Pack’.

The letter of offer leads one to conclude that, where the parties intended to incorporate a policy into the contract, they did so expressly.

The fact that the letter of offer uses the term ‘redundancy’ but does not define it, is of no moment, for reasons I have already given (see paras 131-132).

Nor does the fact that the policy refers to an employee’s contract of employment assist the plaintiff. That simply suggests that they are to be read together and if the notice period under the contract is more generous than under the policy, then the contractual notice period applies. Whether the policy is intended to be promissory or contractual (as opposed to aspirational) obfuscates the real question namely, whether the policy is a term of Mr Whittaker’s employment contract, and that question is to be answered in the negative.

The plaintiff also relies on Riverwood and Nikolich in support of the proposition that a document (such as a company policy containing promissory representations about payment on redundancy) will be incorporated into a contract by reference, and thus form part of the contract, where the document exists, and where the contract refers to it and stipulates it has binding effect.

The proposition put may be taken to correctly state the law, but that does not assist the plaintiff because the contract in this case (the letter of offer) does not refer to the Redundancy Policy, nor does it stipulate that the policy has binding effect. The circumstances in Riverwood and Nikolich are quite different from those in the present case.

In Riverwood the applicant claimed an entitlement to a redundancy payment based on his contract of employment. The letter of offer which had been accepted by the applicant made no reference to any entitlement to a redundancy payment. However, in the part of the letter headed ‘Company Policies and Practices’ the following sentence appeared:

You agree to abide by all company policies and practices currently in place, any alterations made to them, and any new ones introduced.

A Human Resources Policies and Procedures Manual (‘the manual’) was maintained by the respondent company throughout the relevant period. It contained a section dealing specifically with redundancies:

Employment – Redundancies
Where terminations of employment are as a result of redundancy the terms and conditions of the company redundancy policy shall apply. Such situations must be discussed with the general manager, human resources before any action is taken.
For calculation see copy of redundancy agreement attached.

The ‘Redundancy Agreement’ attached was made between an antecedent of the respondent and the Printing and Kindred Industries Union.

The applicant claimed that the Redundancy Agreement had been incorporated by reference into his employment contract on the basis that the reference in the letter of offer to ‘Company Policies and Practices’ was said to be a reference to the manual which included within it the Redundancy Agreement.

The respondent submitted that the reference to ‘Company Policies and Practices’ in the letter of offer could not be regarded as incorporating by reference any entitlements to a redundancy payment. The obligation as expressed in the letter was imposed upon the applicant alone. It was he, and not the respondent, who agreed to ‘abide by all company policies and practices’. The respondent had agreed to nothing in that regard.

At first instance, Weinberg J upheld the applicant’s claim:

Professor Treitel … observes that … courts are anxious to make sense, if possible, of loosely and sometimes carelessly drafted commercial documents.
I consider that to be the approach which should be adopted when construing the obligations which arise from the use of the word “abide” in the letter of [offer]. Those obligations are directly linked to the manual and, accordingly, to the … redundancy agreement as well. The manual is concerned principally, if not exclusively, with laying down employees’ entitlements. The applicant’s agreement to “abide” by Packaging’s “policies and practices” should therefore be construed, in the context of a contract made in good faith, as imposing a like obligation upon the company.[94]

[94](1999) 167 ALR 689 at [92]-[93].

The subsequent appeal was dismissed with the majority (per North and Mansfield JJ; Lindren J dissenting) deciding that the expression ‘abide by’ in the letter of offer embraced both compliance by the applicant with the obligations imposed by the manual and acceptance by him of the benefits conferred by the manual. On this basis, it was said that the policies clause imposed an obligation on the employer to make redundancy payments to the applicant in accordance with the redundancy policy contained in the agreement.[95]
[95](2000) 177 ALR 193 per North J at [103]-[108] and Mansfield J at [146]-[152].

The facts in Riverwood clearly differ from the circumstances in this case. Here the letter of offer expressly incorporates some specified policies, but contains no reference to the Redundancy Policy, and nor does it contain a general provision to the effect that the plaintiff agrees to abide by all of Unisys’ policies and practices.

Nor does Nikolich advance the plaintiff’s case. In that case, the applicant claimed damages for breach of his contract of employment. At first instance, Wilcox J found that the employment contract was contained in part in a formal letter of offer and in part in a lengthy document entitled ‘Working with Us’ (‘WWU’). The WWU contained a provision in these terms:

J B Were will take every practicable step to provide and maintain a safe and healthy work environment for all people.

Wilcox J found that the respondent was in breach of this term. The finding that this term formed part of the contract of employment had its basis in his Honour’s conclusion that the explicit promises made by the firm in the WWU should be regarded as express terms of Mr Nikolich’s contract of employment.

On appeal, the Full Court found, relevantly for present purposes, that the trial judge was correct in concluding that WWU contained a term of the contract of employment that the respondent would take every practicable step to provide and maintain a safe and healthy work environment for its employees.

But it is important to place the court’s conclusions in the relevant factual context, in particular:

(i)When Mr Nikolich received Goldman’s letter of offer, it also provided him with several documents including the WWU.[96] On appeal, Jessup J regarded this as ‘a most relevant circumstance’ and held that ‘the contemporaneous provision of WWU was a circumstance proper to be taken into account in drawing the inference’ as to what the parties had intended.[97]
[96][2006] FCA 784 at [228] per Wilcox J.
[97][2007] FCAFC 120 at [283].
(ii)Mr Nikolich was required to read the WWU and sign some forms contained within it.[98] Importantly, he was asked to sign off on the employer’s health and safety statement; he was asked to state that he had read and understood the statement and to acknowledge, in effect, that it outlined his obligations as a team member. Jessup J regarded this fact as significant:
[98][2007] FCAFC 120 at [120] per Marshall J.
Where one party draws a document, provides it to the second party for his signature and includes a statement manifestly laying the groundwork for the second party later to e held to his knowledge and understanding of the document, there would rarely be any doubt but that the first party was intending the document to have contractual operation, if otherwise the context were appropriate.[99]
[99][2007] FCAFC 120 at [327[.

(iii)The letter of offer contained the following paragraph:
General Instructions
From time to time the Company has issued and will in the future issue office memoranda and instructions with which it will expect you to comply as applicable … .

Wilcox J regarded this provision as sufficient to incorporate WWU into the applicant’s contract of employment. He compared the obligation that Mr Nikolich ‘comply as applicable’ with office memoranda and instructions, with the term in Riverwood that the employee would ‘abide by’ the policies and practices contained in a secondary document. His Honour concluded that:

There is not much difference between the wording of the two terms. Also, in both cases, the relevant secondary document clearly purported to impose obligations on the employer, some, at least, of which are obligations customarily found in employment contracts and which would otherwise be absent from the employment contract. Accordingly, it seems to me that the approach taken in Riverwood has application to this case.[100]

On appeal, Marshall J adopted the trial judge’s conclusion and found it compelling;[101] Jessup J found that his Honour was wrong to apply Riverwood in the circumstances and that the ‘General Instructions’ provision of the letter of offer did not operate to incorporate WWU into the contract[102]; and Black CJ decided the appeal on a different basis.

[100][2006] FCA 784 at [246].

[101][2007] FCAFC 120 at [119].

[102]Ibid at [284]-[290].

The factual circumstances outlined above are not present in the matter before me. In particular, the letter of offer does not contain a general provision to the effect that Unisys would expect the plaintiff to comply with presently existing and future ‘office memoranda and instructions’. Nor was Mr Whittaker required to sign a copy of the Redundancy Policy (and by so doing stating that he had read and understood it) and nor was he provided with a copy of the policy prior to accepting Unisys’ offer of employment.

The content of the contract of employment is ascertained objectively as the High Court said in Toll (FGCT) Pty Limited v Alphapharm Pty Limited:

It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relation. What matters is what each party by words and conduct would have lead a reasonable person in the position of the other party to believe. References of the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction. [103] (citations omitted)

[103](2004) 219 CLR 165 at 179.

In deciding whether, as a matter of inference, the Redundancy Policy is a term of the plaintiff’s contract, it is appropriate to consider the facts and circumstances surrounding the making of the contract, including the content of relevant documents. The following particular matters lead me to conclude that the Redundancy Policy is not a term of the contract:

Øthere is no express reference to the Redundancy Policy in the letter of offer, nor is there any more generally expressed provision which may be said to incorporate the policy;
ØMr Whittaker was not provided with a copy of the Redundancy Policy at the time he accepted Unisys’ offer of employment (but was provided with some other Unisys policies);
ØMr Whittaker was not asked to sign a copy of the Redundancy Policy (signifying that he had read and understood the policy), but was asked to sign a number of other policies; and
Øthe fact that the letter of offer uses the term ‘redundancy’ but does not define it, is of no great moment (for the reasons set out at paras 131-132).

But even if I am wrong, and the Redundancy Policy did form part of the plaintiff’s contract, I am not persuaded that the policy gives rise to any entitlement to severance pay in the circumstances of this case. Under the policy an entitlement arises in the event of retrenchment. ‘Retrenchment’ is defined as ‘the act of terminating employment of an employee occupying a redundant job’. Redundancy is defined in the following terms:

Redundancy is what happens to a position when work (or a major portion of it):
•no longer needs to be performed.
•will be performed at a new location requiring the incumbent of the job to change residence, and the incumbent is not willing to transfer on terms acceptable to the incumbent and Unisys.
•is reorganised or changed due to new technology, new business practices, downturn in business, reduced employee numbers or a general regrading of jobs such that the role of the incumbent effectively ceases to exist.

The policy defines redundancy in terms of what happens to a position, hence it is narrower in compass than redundancy at common law (see paras 91-96). A redundancy is said to arise with the occurrence of one of the three circumstances set out in the definition. None of those circumstances arise in this case.

The ‘position’ here is Mr Whittaker’s former VP and GM role. That position is to be understood in terms of the collection of functions, duties and responsibilities formerly entrusted to Mr Whittaker.[104] As I have already noted the elements that made up that role were redistributed between Ms Carter and Mr Whittaker. Hence it cannot be said that Unisys no longer needed those functions, duties and responsibilities to be performed. Accordingly, the first circumstance in which redundancy may arise does not apply here.
[104]Jones (1995) 60 IR 304 at 308.

As to the second circumstance, there is no suggestion that it applies in this case.

In terms of the third circumstance which may give rise to redundancy, it is clear that work has been reorganised but that of itself is not sufficient. The reorganisation must be such that ‘the role of the incumbent effectively ceases to exist’. That is not the case here. The role performed by Mr Whittaker continues to exist, and is performed by Ms Carter. Nor can it be said that Mr Whittaker was left without any work to do. For reasons already given, I reject the proposition that the mega deal position did not exist.

I now turn to consider the issue of mitigation.

(iv) Mitigation

The defendant contends that the plaintiff, without reasonable excuse, has ‘wholly failed to mitigate any loss’. This contention is put on the basis that it was ‘plainly unreasonable’ for the plaintiff to refuse to accept the offer of the ‘mega deal’ role in circumstances where he had the skills, competence and training to perform the role and it was on the same terms and conditions as his previous role.

There are two answers to the defendant’s contention, both of which lead to its rejection.

First, the issue of mitigation only arises after the termination of the contract. In cases of repudiatory breach, the termination of the contract is not retrospective to the time of breach[105] but rather operates from the election by the innocent party to exercise their right to terminate the agreement. In this case, Mr Whittaker communicated his intention to accept the repudiation and terminate the contract on 10 April 2008.
[105]Larratt v Bankers and Traders Insurance Co Ltd [1941] 41 SR (NSW) 215 at 226.

No offer of a ‘mega deal’ role was made to Mr Whittaker after the date on which the contract was terminated. It cannot be said that the plaintiff acted unreasonably in failing to accept the offer of a ‘mega deal’ role in circumstances where no such offer was made.

In the event that the above analysis is incorrect, there is a second, alternate, basis for rejecting the defendant’s contention, that is, I am not persuaded that the plaintiff acted unreasonably in failing to accept the offer of a ‘mega deal’ role.

The question of what steps were reasonable in the mitigation of loss is a question of fact to be determined having regard to the particular circumstances.[106]
[106]Payzu Ltd v Saunders [1919] 2 KB 581.

At common law, a plaintiff is expected to take reasonable steps to minimise the effect of a breach of contract. As Lord Haldane said in British Westinghouse Electric and Manufacturing Co. v Underground Electric Railways Co. of London Ltd (No 2):

The fundamental basis is thus compensation for pecuniary loss flowing from the breach; but this first principle is qualified by a second, which imposes on a plaintiff the duty of taking all reasonable steps to mitigate the loss consequent on the breach, and debars him from claiming any part of the damage which is due to his neglect to take such steps.[107]

[107][1912] AC 673 at 689.

While it is frequently asserted that there is a ‘duty’ to mitigate it is somewhat misleading to speak in terms of a duty. Rather, the principle of mitigation operates pro tanto as a conditional bar on the recovery of damages.[108]
[108]Sotiris Shipping Inc v Sammie Sol hilt [1983] 1 Lloyds Reports 605 at 606, per Donaldson MR.

In certain circumstances, an innocent party may be required to explore mitigation through a resumption of contractual relations on the initiative of the other party. In the context of contract cases courts are frequently called on to determine the extent to which an injured party is required, on discharge by breach, to enter into a new contract with the contract-breaker. But it is important to bear in mind that mitigation does not require a party to do what is unreasonable - plaintiffs are not required to do things that present serious risks to their interests. They are not required to take unreasonable steps to mitigate their loss.[109]
[109]Burns v MAN Automotive (Aust.) Pty Ltd (1986) 161 CLR 653 at 659 per Gibbs CJ and at 677 per Brennan J.

Whatever be the position in respect of commercial transactions,[110] it is apparent that employment cases may involve different considerations. As Blain J said in Yetton v Eastwood Froy Ltd:

As I see the matter, it is a plain question of fact for the court in any particular case, whether any particular refusal to accept alternative employment which would reduce a plaintiff’s loss is a reasonable or an unreasonable refusal, and factually, even if not as a strict matter of law, personal factors clearly are more likely to be of weight or are likely to be of greater weight in cases of personal services than in what I call (for want of a better word) soulless cases of sale of goods contracts where money may often be the only important factor. Certainly personal factors do not have to be ignored in the making up of a dismissed servant’s mind when he comes to make a decision reasonable or unreasonable.[111]

[110]The extent to which the decided cases require an injured party, by discharge of contract or by breach, to enter into a new contract with the contract breaker has been the subject of academic criticism: see Bridge MG, “Mitigation of Damages in Contract and the Meaning of Avoidable Loss” (1989) July 105 The Law Quarterly Review 398-423.

[111][1966] 3 All ER 353 at 365.

In employment cases the question of whether a dismissed employee acted unreasonably in refusing an offer of re-employment depends on the circumstances. It is not unreasonable to refuse such an offer where the level of remuneration[112] or status[113] of the position offered is less than that previously enjoyed by the dismissed employee. But with the passage of time, it may be reasonable for the dismissed employee to lower their sights.[114] Even where re-employment is offered on substantially the same terms and status, it will not be unreasonable to refuse in circumstances where the employee no longer trusts his or her former employer[115] or where there is friction between the two parties.[116]
[112]Shindler v Northern Raincoat Co Ltd [1960] 2 All ER 239.
[113]Yetton v Eastwood Froy Ltd [1966] 3 All ER 353.
[114]Yetton v Eastwood Froy Ltd [1966] 3 All ER 353 at 366 per Blain J.
[115]Bostik (Australia) Pty Ltd v Gorgevski (No. 1) (1992) 36 FCR 20 at 32 per Sheppard and Heery JJ.
[116]Shindler v Northern Raincoat Co. Ltd [1960] 2 All ER 239.

In the present case, the mega deal position constituted a substantial diminution in status and responsibility when compared with the plaintiff’s former VP and GM role. In such circumstances, it was not unreasonable for the plaintiff to have refused to accept the offer of the mega deal role.

Contrary to the defendant’s contention, the plaintiff has not failed to mitigate his loss.

Conclusion

The removal of the plaintiff from the VP and GM role and the offer of the mega deal position constituted a repudiation of the plaintiff’s contract of employment, which the plaintiff elected to accept resulting in the termination of the contract.

Unisys’ repudiatory conduct resulted in the termination of the plaintiff’s contract for reasons related to the restructuring of Unisys’ business. In these circumstances, the plaintiff is entitled to six months’ pay.

The plaintiff’s redundancy claim is dismissed because the Redundancy Policy upon which the claim is based did not form part of his contract of employment. In the alternative, in the event that I am wrong and the Redundancy Policy was a contractual term, I am not persuaded that any entitlement to severance pay pursuant to the policy is enlivened in the circumstances of this case.

The plaintiff also claims interest pursuant to s 58 of the Supreme Court Act, at the rate prescribed in the Penalty Interest Rates Act 1983, and costs. These matters will be dealt with in the settlement of the order arising from this decision.

Mr Fernon:	… Mr Whittaker, a similar performance plan and reviews documents appears commencing at p 129, correct? Is that so?
Mr Whittaker:	Correct.
Mr Fernon:	And again you set out your accomplishments at p 129 in respect of that period?
Mr Whittaker:	That’s correct.[47]

[2010] VSC 9

29 January 2010