Roger v Adsteam Agency Pty Limited [2006] NSWIRComm 89 (30 March 2006)

Last Updated: 30 March 2006

NEW SOUTH WALES INDUSTRIAL RELATIONS COMMISSION

CITATION : Roger v Adsteam Agency Pty Limited [2006] NSWIRComm 89

FILE NUMBER(S): IRC 7387

HEARING DATE(S): 25/10/05, 06/02/06, 07/02/06

DECISION DATE: 16/03/2006

PARTIES:

APPLICANT:

David Roger

RESPONDENT:

Adsteam Agency Pty Limited

(ACN 077 306 453)

JUDGMENT OF: Schmidt J

LEGAL REPRESENTATIVES

APPLICANT:

Mr J Sleight of counsel

SOLICITORS:

Matthew Hourn

RESPONDENT:

Mr J Clarke of counsel

SOLICITORS:

Clayton Utz

CASES CITED: Davies & Anor v General Transport Development Pty Ltd [1967] AR (NSW) 371

Drabsch v Switzerland General Insurance Co Ltd [1999] NSWSC 1030

National Australia Bank Ltd v Rusu and Ors (1999) 47 NSWLR 539

Stevenson v Barham (1977) 136 CLR 190

LEGISLATION CITED: Evidence Act 1995

Industrial Arbitration Act 1940

Industrial Relations Act 1996

JUDGMENT:

- 1 -

INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES

IN COURT SESSION

CORAM: Schmidt J

16 March 2006

Matter No IRC 7387 of 2003

DAVID ROGER v ADSTEAM AGENCY PTY LIMITED

Application under section 106 of the Industrial Relations Act 1996

JUDGMENT

[2006] NSWIRComm 89

1 These proceedings concern the fairness of two aspects of the contract of employment entered by Mr David Roger, after he was headhunted by Adsteam Agency Pty Limited ('Adsteam') in 1999, to take up a new position managing the Adsteam bulk handling division. The complaints pressed went to an alleged misrepresentation in relation to a promise of 75,000 shares, after the first twelve months of his employment and to the alleged failure to give fair or adequate notice on termination, when Mr Roger's employment came to an end in 2003. Adsteam disputed both that shares had been promised, as claimed, and that there had not been fair, or adequate, notice given of the termination of the employment.

2 The claims pressed in the amended summons were:

1. An order that the contract or arrangement and/or collateral arrangement and/or collateral arrangement between the applicant and the respondent whereby the applicant and the respondent whereby the applicant performed work in an industry for the respondent ("the Contract") or any collateral arrangement or related condition or related condition to the contract was unfair, harsh and unconscionable, and/or contrary to the public interests.

2. Further, an order varying the Contract or any collateral arrangement or related condition to the Contract from its commencement or some other time as follows:

(i.) To insert the following;

Inducement payment - after the completion of one year's service the company will grant you 75,000 shares.

(ii.) In the event that your contract is terminated without cause and due to company restructuring you will be paid six months' total salary package in lieu of notice and severance payment.

(iii.) On termination you will be paid all your bonus entitlements on a pro-rata basis.

3. An order that the respondent be liable to pay the applicant:

(a) Such amount of monies in connection with the Contract as varied as the Commission considers just in the circumstances of the case; and

(b) Interest on the sum from 11 October 2000 or such other dates as the Commission determines calculated pursuant to Section 94 of the Supreme Court Act 1970.

4. An order that the respondent be liable to pay the applicant's costs of these proceedings.

5. Such further or other orders as the Commission considers appropriate.

3 Order 2 (iii) was not pressed. The money orders sought were:

(a) Payment in lieu of notice and/or severance payment - six months in accordance with the applicant's total remuneration (inclusive of superannuation) - $60,375.00.

(b) 75,000 shares @ $1.65 (approx) = $123,750.00

(c) ...

Total $184,125.00 (approx)

The evidence

4 Evidence was given by Mr Roger and in the respondent's case, evidence was called from Mr Jan Schot, General Manager; Mr Clay Frederick, consultant; Mr Roger Richards, previously Managing Director and the respondent's solicitor, Mr Abraham Ash. Various documents were also tendered. While there were was no disagreement about much of what occurred, there were various conflicts in the evidence, which I will deal with below.

5 It was common ground that Mr Roger was first approached by Mr Frederick in April 1999. Mr Frederick was then Adsteam's chief executive officer and a director of the company. Adsteam had acquired Burns Philp Shipping Agency and proposed to create a national bulk agency, merging its own business with the Burns Philp Agency. Adsteam had been unsuccessful in recruiting a general manager of this new bulk handling division. It was Mr Frederick's decision to approach Mr Roger, who was employed by P&O as marketing director of its shipping business and marketing manager of its chartering agency division. He had then worked for P&O for over 31 years.

6 During their initial discussion and consistently with his usual practice, Mr Frederick explained Adsteam's discretionary share scheme and how Mr Roger would participate in it, in these terms:

"Participation in the plan is entirely at the discretion of the Board, and it depends upon both company and individual performance. However I would be prepared to recommend that you participate when the next allocation becomes due.

Participants receive an allocation of shares, together with a non-recourse loan debt to cover the value of the shares. This loan is repaid over time by applying dividends to it. When the loan is fully repaid, the shares vest with the participant. If the participant leaves the company, the participant can repay the balance of the loan and then owns the shares, or alternatively the shares will be sold and if the proceeds exceed the outstanding loan the participant receives the difference. If the proceeds fall short of the outstanding loan, the loan is forgiven."

7 Mr Roger did not dispute this outline of the explanation he received. However, in cross examination, for the first time, Mr Frederick suggested that he also told Mr Roger that the share scheme also permitted 'prospective operation'. What this meant was not explained. When pressed Mr Frederick explained that he did not include this aspect of the conversation, in his affidavit, because he wasn't 100% sure that he had discussed this. This aspect of the conversation was not put to Mr Roger in earlier cross examination.

8 After this initial approach, the discussions were pursued by Mr Richards and later by Mr Schot. A written offer was made to Mr Roger in May, which he rejected, indicating however, that he was prepared to discuss the prospect further. This led to a further offer in June, which was the subject of further discussion and a final offer in early August. That offer was later accepted and the employment commenced in October.

9 There was an issue as to whether what was offered were shares, or merely the opportunity to participate in Adsteam's general discretionary share scheme, which Mr Frederick had earlier explained.

10 Mr Richards' initial letter of 26 May provided, relevantly:

Salary A$105,000 per annum

Superannuation 7.0% (SGL)

Car A grade 2 vehicle (List price to A$52,000.00)

Annual Bonus This would depend on three factors - individual performance - Divisional performance against budget and Group performance against budget.

Shares The Company has a share plan whereby key individuals are invited by the Board to take up a parcel of shares which are then paid for by dividends.

11 Mr Roger rejected the offer, but invited further discussions, which were pursed. In the revised offer of 9 June, Mr Richards wrote:

I can confirm that the door is certainly not closed vis a vis the position with Adsteam Agency. I have discussed matters with Clay and we would like to offer some further inducement to you and at the same time to clarify the share plan as it would affect your good self.

The parameters of the salary are difficult to change due to existing internal arrangements, but there is some room to alter the superannuation to 15% of salary. I trust this helps.

In regard to the shares, the company is prepared to offer you 75,000 shares on completion of your first year with the company. You will appreciate this has to be formally passed by the board once you have joint us.

12 Mr Roger understood the shares offered to be a 'one off bonus' payable after one year. He regarded this to be an inducement offered to encourage him to accept the position. While the offer was attractive, he did not accept it. The discussions continued, with Mr Roger seeking other improvements to the offer. By this time, Adsteam had also identified another candidate and discussions were also pursued with him.

13 In June, Mr Schot discussed the two candidates with Mr Frederick. By email of 25 June, Mr Schot wrote to Mr Frederick, in relevant terms:

Clay,

Just a quick update.

I spoke to David last night, who now seems to have a problem with life insurance which is not well covered by Adsteam's Super Annuation(sic) He needs a minimum of A$ 0.5 million.

With David we stand now at A$ 105,000 salary, plus 15% super, plus car, plus a possible additional for life insurance, plus 75,000 shares after one year.

... was offered A$ 105,000 plus 7% super, plus car. This most likely would have to be settled at A$ 100,000 plus 12% super plus car.

I still believe ... is the best man, simply because he is less of a prima donna and seem to be able to decide quick. The only problem I see by turning David down, is possible repercussions towards Adsteam. On the other hand buying David away, may result in the same thing.

If you agree I make a firm offer to ... and upon his confirmation, we have to advise David.

Please advise. Thanks.

14 Mr Frederick denied that he understood from this email, that Mr Roger had been offered shares, rather than the opportunity to participate in Adsteam's discretionary share scheme, even though, on his evidence, the share scheme would have applied in the same way to both candidates. He agreed, however, that he discussed with Mr Schot the 75,000 shares Mr Roger had been offered. He explained in cross examination that it was his intention at that time, to recommend that Mr Roger receive that number of shares, in a year's time.

15 Mr Richards retired and in July, Mr Schot became Adsteam's general manager, to whom the position Mr Roger was discussing would report. Mr Roger was not Mr Schot's preferred candidate for the job. Indeed, Mr Schot had doubts that Mr Roger even wanted the job.

16 In accordance with his wishes, Mr Schot's preferred candidate was offered the position, but he declined it. The discussions with Mr Roger were then continued by Mr Schot. Mr Schot was not happy to improve Adsteam's offer, by addition of payment of a life insurance policy, worth about $5,000, which Mr Roger was still seeking. Again, he discussed this with Mr Frederick. Adsteam refused what Mr Roger was seeking in relation to the life insurance policy, a decision which Mr Schot explained was jointly made by he and Mr Frederick. Mr Roger then asked Mr Schot to confirm Adsteam's offer. Mr Schot's letter of 6 August provided:

In reference to our conversation of today, I hereby re-confirm our offer, which is as follows:

Salary - A$105,000.00 per annum.

Superannuation - 15% (SGL).

Car - A grade 2 vehicle (List price upto A$ 52,000.00)

Annual bonus - At the Company's discretion, as mentioned in our letter of 26 May 1999.

Shares - The Company is prepared to offer you 75,000 shares on completion of your first year with the Company. This to formally pass by the Board, once you have joined us.

17 On his evidence, Mr Roger understood he was being offered 75,000 shares, not merely participation in the generally available discretionary share scheme, which Mr Frederick had explained to him at the outset and which he had been offered in May. In cross examination, Mr Roger explained why he found that offer very attractive - he took the view that the value of the shares he was being offered was at least $150,000 on par value. This would compensate him for what he would lose by early retirement from P&O. He disagreed that such an offer was 'quite unreal'. On his understanding, the sum amounted effectively to the financial loss he would be incurring from his resignation. He was not surprised at the offer when he first received it, although he thought that the June letter might have had a paragraph missing, when he read it.

18 The first offer in May had indicated that there would be a formal letter of appointment. Mr Roger was never given such a document. On Mr Roger's evidence, in late August he spoke to Mr Schot by telephone and advised:

Mr Roger: "I would like to accept the offer of employment as set out in your letter of 6 August 1999."

Mr Schot: "In order to issue a formal letter of appointment we will require confirmation of resignation."

19 On Mr Schot's evidence, the conversation was to a slightly different effect. On his evidence on 19 August, they had a telephone conversation:

Applicant: "Jan, I accept your final offer and will cover the additional cost of life insurance myself. Meanwhile how would you propose we proceed?"

Me: "I propose that I supply you with a draft copy of the service agreement, which we would need to be signed. When can you drop by to pick it up?"

Applicant: "I can pick it up on Monday".

Me: "Fine, I'll have it ready."

20 On his evidence, Mr Schot provided the agreement to Mr Roger on 23 August, when they again spoke, to the following effect:

Me: "When do you believe you would be able to start with Adsteam?"

Applicant: "I cannot resign until Peter Lamborn, the Manager of Beaufort, returns to the office later this week from his overseas trip. I have been too long with this company to do this in writing only. I prefer to do this in person. I also need to have the confirmation on my Life Insurance Policy for which I have to undergo a medical test. I am also not happy with the three-year term."

Me: "That is standard. It also applies to me."

21 Mr Roger did not dispute this conversation in his reply affidavit.

22 Mr Schot sent a memo to Mr Frederick on 23 August, advising that he had provided the service agreement to Mr Roger and that Mr Roger would resign from P&O, after undergoing a medical test for confirmation of his life insurance policy and the return of his boss from overseas. The memo also contained a handwritten note, raising the question of whether the three year term could be left out.

23 While there was initially an issue, on the evidence, as to the date on which Mr Roger first received the draft service agreement from Mr Schot, Mr Roger accepted in cross-examination that it was before the end of August. On his own evidence, this was well before he resigned from P&O, some time after 7 September.

24 On his evidence, Mr Roger received various drafts of the agreement. They were all in standard terms, providing for a fixed three year contract, terminable, however, by either party on six months' notice, after the first two years.

25 Mr Roger was concerned about the three year term. He regarded it to be inconsistent with his earlier discussions with Mr Frederick, as to the long term nature of what Adsteam was seeking to achieve, by establishing the new division and the purpose of his employment to grow that business.

26 Mr Roger also raised his concern direct with Mr Frederick, to the following effect:

Mr Roger: "Clay I am surprised to have just received a Service Agreement in the mail from Adsteam, particularly as it appears to be for a defined period of 3 years, and there is no reference to the allocation of shares".

Mr Frederick: "The Service Agreement of 3 years is not something that you should be concerned about, it is a policy we have undertaken to bring all management staff in the group to common terms and conditions, and the document is for a 3 year fixed duration as this is the maximum term permitted by the legislation covering the AWA. Similarly, share issues are not something that we cover in this document".

27 Mr Frederick could not recall shares been discussed, but agreed that it was possible. He recollected the conversation in these terms:

The Applicant: "Clay, I am worried about this three year contract."

Me: "David, all of our Service Agreements are for no more than three years. I'm on a three year Service Agreement. All senior managers are on a three year Service Agreement. These Service Agreements simply describe agreed terms and conditions of employment."

28 Mr Roger explained in cross examination that from this discussion, he formed the view that the three year term would apply to him, but 'that it had no bearing on the nature of my employment being permanent or otherwise.'

29 Mr Roger resigned from P&O, some time after 7 September and later executed the final agreement, in terms different to those initially provided, Adsteam having in the meantime agreed to the inclusion of a dispute resolution clause, which Mr Roger had later pursued on legal advice. On his evidence in cross examination, Mr Roger did not pursue advice about the three year term. He was not concerned about that term when he signed the agreement, because Mr Frederick had 'indicated to me that it was a simple document I should not be concerned with'.

30 The agreement referred to the agreed 15% superannuation, Adsteam's discretionary bonus and employee share schemes, but not to the 75,000 shares promised. As to shares, the agreement provided in clause 5:

5.0 Employee Share Scheme

5.2 The Employee may be invited to participate in the Employee Share Plan (ESP) as decided by the Board of Adsteam Marine Limited from time to time.

5.3 The extent, if any participation in the ESP is entirely at the discretion of the Board of Adsteam Marine Limited.

31 Mr Roger also recalled that during their discussions, Mr Schot had shown him a copy of the employee share plan handbook. On Mr Schot's explanation in cross examination, the scheme had regard to individual, division and group performance and required the board to exercise its discretion to invite an employee to participate in the scheme. On the evidence of Mr Frederick, Mr Schot and Mr Richards, they only ever intended to offer Mr Roger participation in that share scheme.

32 It was Adsteam's case that consistently with the service agreement executed, it and Mr Roger had agreed to a three year fixed term contract and the possibility that Mr Roger might in future be offered participation in the discretionary share scheme. The offer of 75,000 shares was always subject to the terms of that scheme, which Mr Frederick had described at the outset. In cross examination, Mr Schot explained that he understood the 75,000 shares offered in his August letter were offered under the share scheme, even though no reference to the scheme was made in the letter, because 'shares in our company are always subject to the employee share.'

33 Mr Schot's evidence was that he had not discussed the number of shares offered with Mr Frederick, he had taken that number from Mr Richard's June offer letter. Mr Frederick's evidence was to different effect. On his evidence, they had discussed the 75,000 shares offered before the August letter was sent.

34 Mr Schot agreed that he understood that neither he, nor Mr Richards, had the authority to bind the Adsteam board in respect of the share plan. When asked if it was impossible to give an employee an indication of how many shares they were going to get, before they were employed, Mr Schot explained:

"That was a discussion between Clay Frederick and David Roger. I cannot judge that, I cannot answer that question."

35 When the question was pressed, his response was:

"It is impossible to make that decision without approval of the board."

36 Mr Schot confirmed that as far as he was aware, no such approval had been sought. Mr Schot was also unable to explain how 75,000 shares could be promised, if that was subject to individual and company performance in future, as then judged by the board. The basis of the prediction, on his evidence 'must have been a discussion between Clay Frederick and David Roger'. He persisted with a denial, however that the 75,000 shares offered after one year could not have been referring to the share plan, even though he agreed that nowhere in the share plan was there an ability to promise a fixed amount of shares some time in the future. He also agreed that an outright promise of shares, would have been an unusual, but not impossible, offer for Adsteam to make.

37 Contrary to Mr Schot's understanding, however, Mr Frederick and Mr Roger had never discussed the offer of 75,000 shares, or how it could be made, in the context of the Adsteam share scheme, as Mr Frederick had explained it to Mr Roger, at their first meeting.

38 Mr Richards' evidence, in cross examination, was that when he offered the 75,000 shares in the June letter, he was unaware of how the share scheme operated, even though he was the managing director at the time. As he explained it, this was a caretaker role, after he had sold a business to Adsteam. He was unaware of the share scheme until told of it by Mr Frederick, before preparing the May letter. He discussed with Mr Frederick what more could be offered to Mr Roger, after he had rejected the first offer made and it was Mr Frederick who quantified the 75,000 shares.

39 Mr Frederick confirmed in cross examination that this number had come from him. He explained that while the scheme operated according to the board's discretion, its decisions were usually made on the basis of recommendations, which generally came from him, 'so I had a pretty good idea of the rough quantum to be consistent with others and the likelihood of it being accepted by the board'.

40 This, was not, however, reflected in the offer made to Mr Roger, either in June or later, in August.

41 Mr Roger sought legal advice about the service agreement in late September. On his evidence, he did not seek specific advice about the fixed term of the employment, or the absence of any reference to 75,000 shares, but general advice about the terms of the agreement. His legal advice was that it was a reasonably built document, although missing a dispute resolution clause. As a result, he pursued the inclusion of a dispute resolution clause in the agreement, which Adsteam accepted. He was given the choice of signing a service agreement which contained the clause proposed and one which did not. He chose to include the clause and in fact twice signed the agreement in those terms, the first one having been misplaced.

42 In cross examination, Mr Roger eventually confirmed, when pressed, that he understood when signing the service agreement, that it formed a part of his contract of employment and that he would be bound by its terms. He, however, adhered to his opinion that the notice provisions in the agreement had no real meaning in his circumstances, given the understanding he had with Mr Frederick about his employment. It was also his view, that the offer letter promising 75,000 shares, also formed part of his agreement.

43 Mr Roger never received the promised 75,000 shares, or any shares granted under the share scheme. The question of the 75,000 shares was never put before the board for formalisation, as the June and August offer letters foreshadowed. Nor was the suggestion that Mr Roger should participate in the discretionary share scheme ever put to the board.

44 Mr Frederick's evidence was that the first allocation made under the share scheme was in mid-1997. Allocations were also made in mid-1998 and mid 1999. In the normal course, Mr Roger would have been included in the mid 2000 allocation, but the board decided to make none that year, or in 2001, because budget was not being achieved, In 2001, the scheme was suspended and a new arrangement was introduced, which required company performance hurdles to be met after three years. Such hurdles have not been met and no shares under the new scheme have vested.

45 In cross examination, Mr Frederick explained that recommendations were made to the board in anticipation that they would be accepted. 'In the interim the performance of the company had deteriorated to the extent that no recommendation, Mr Roger or any others, were going to be accepted by the Board. Therefore you do not make any recommendation in those circumstances'.

46 At the end of his first year of employment, Mr Roger raised and pursued the 75,000 shares he understood he had been promised, with both Mr Schot and Mr Frederick, to no avail. Mr Frederick's evidence was that the matter was never, in fact, raised with the board. He explained:

The net effect of the situation in 2000 and 2001 relating to company performance was that any recommendation regarding the Applicant by me in 2000 would have had no possibility of being accepted by the Board. The matter was not formally put to the Board. In about 2000-2001, the Respondent's overall performance was faltering. Shipping was in the doldrums and the Agency Division was performing poorer than the rest of the organisation. The board was becoming increasingly disenchanted with the Agency. Several attempts were made to sell the division. There was a real antipathy in the Board towards rewarding the Agency in any way at this time. By way of example, there was an ongoing issue of a special bonus which possibly should have been paid to Jan Schot which Jan believed he was owed. The Managing Director, David Ryan, resisted that payment to Jan on the basis that the Agency was performing poorly.

47 None of this was explained to Mr Roger.

48 In June 2001, Mr Roger again pursued the question of the promised shares with Mr Frederick, who apologised for the delay and promised to 'check the position and revert'. On the evidence he did neither. Mr Frederick explained in his affidavit evidence, that as no shares were issued under the share scheme in 2000 or 2001, he 'therefore concluded that Mr Roger was not entitled to any shares under the Employee Share Plan for those financial years.' He never considered that Mr Roger had a separate entitlement to any shares, given the offers the respondent had made him before his employment. Again, none of this was explained to Mr Roger, who simply received no response at all to his repeated enquiries.

49 The fact was that the bulk agency business was not as successful as had been hoped. Mr Roger had quite a successful performance review at the end of his first year of employment, but his subsequent reviews were not as good. Mr Schot and Mr Roger did not get on well together. Even before the employment commenced, Mr Schot had reservations about Mr Roger and at one point in 2001, Mr Schot considered terminating his employment.

50 Mr Roger's three year contract was due to come to an end in October 2002. Rather than his employment coming to an end, in August, Mr Schot offered Mr Roger a one year extension of the contract. Mr Roger accepted the offer after consideration, but without further discussion, it seems, with either Mr Schot or Mr Frederick. Mr Schot's evidence was that he advised Mr Roger at this time that:

Me: "David, in view of the current circumstances in your division and the uncertainty of the outcome of the tender called by ExxonMobil, I propose to extend the existing agreement by one year."

Applicant: "Would you like to have my response?"

Me: "I understand you need time to consider this. I propose you give me a response latest by the end of the month."

Applicant: "Ok. Fair enough."

51 Mr Roger did not dispute this. On his evidence in cross examination, he had no alternative at the time but to accept the offer and explained that 'I didn't actually give any more concern that (sic) I had in signing the three year term on the original document' and 'I didn't see the one year's extension being the primary employment document based on the conversation I had with Clay Frederick.' He agreed that in fact, he made no complaint at all to Mr Schot about the term of the extension, nor did he suggest that the extension to which he agreed was inconsistent with his permanent employment. As he explained it:

My understanding of the entire employment issue was my employment was being effectively promoted by Clay Frederick by the time 2002 come to pass I was aware that Jan Scot's view was not consistent with Clay Frederick. My over riding belief was that the understanding I had with Clay Frederick was the intention of the employment took precedence over the service agreement.

52 The only basis upon which Mr Roger advanced that understanding, was his discussion with Mr Frederick about the three year term in the service agreement, earlier outlined. He further explained his understanding and how that affected his agreement to the one year extension of his contract in cross examination, in this way:

My discussions for this position through the various people that I discussed that with at Adsteam no time had a precontract referred to honour the presentation of that proforma agreement. On receipt of a contract which stated that with my name on it I spoke to Clay Frederick, I had assurance from him that was a document we all signed off to standardise the terms and conditions of employment, it was at no time relevant to ongoing employment situation. Under those circumstances yes I believe it was their responsibility to indicate if there had been a change of circumstances in that permanent employment situation.

53 The serviced agreement had originally provided:

2.1 The Agreement shall commence on 18 October 1999 and continue for three years, unless terminated earlier as provided for under this Agreement. If after this period, both parties wish to extend this Agreement, then a new Agreement may be negotiated.

8.2 This Agreement may be terminated at any time after a period of two years by either party upon six months' notice being given.

54 In 2002, Clause 2.1 was amended to provide:

2. The Agreement shall commence on 18 October 1999 and continue for four years, unless terminated earlier as provided for under this Agreement. If after this period, both parties wish to extend this Agreement, then a new Agreement may be negotiated.

55 In April 2003, Mr Schot gave Mr Roger six months' notice of the termination of his employment, by a letter which stated:

In reference to clause 2.1 (Addendum 1) and clause 8.2 of the Service Agreement, we hereby give notice to termination.

56 Mr Schot's evidence was that Mr Roger raised no concern with him about this advice, at the time. Mr Roger did not dispute this evidence. It appears that he did not discuss this letter with either Mr Schot or Mr Frederick, although in cross examination his evidence was that the presentation of the letter was 'prefaced with the information that that was simply to table, to have Adsteam in a better position to negotiate an ongoing service agreement.' This was put to Mr Schot in cross examination and denied.

57 In cross examination, Mr Schot explained that under the terms of the contract, Adsteam was not obliged to give Mr Roger any notice of termination, to bring his employment to an end in October 2003. He, however, gave this notice, because he thought that was a fair approach to adopt, because Mr Roger would then have time to look for alternatives, should it come to termination. While not absolutely required, he thought this a good practice to adopt. He also denied that he ever believed that Mr Roger was employed under a continuing contract, without any fixed term expiry.

58 Mr Schot also explained in cross examination, that when he gave Mr Roger the notice in April, he thought it would be necessary to dispense with Mr Roger's services, because of the way the division was heading and the losses it was making. His belief was that the board would have to restructure. Mr Schot agreed that he had not dealt with these matters in his affidavit, but said that he had explained this to Mr Roger 'many times', when discussing the health of the division with him. Mr Roger did not deal with this matter in his evidence.

59 Mr Schot gave Mr Roger a further letter on 2 September 2003.

60 Mr Schot's evidence was that he then explained to Mr Roger:

Me: "David, in view of the difficult situation prevailing in your division and in order to meet the recently approved budget for Agency, I have no choice but to restructure the bulk agency division."

I therefore had to make the difficult decision to give you 6 months' notice as per the service agreement, which means that your employment will be terminated on 17 October 2003.

I understand that this comes as a shock to you and I can assure you this has not been easy for me either.

I respect that you need time to look for alternative employment and in order to give you ample time and opportunity to do so, you may leave today and continue to make use of your company car at our expense until 17 October. I had your termination calculation/cheque prepared."

Applicant: "I am shocked, but cannot say it comes a surprise. I will clean up my desk and leave in the course of the day."

61 Mr Roger did not dispute this conversation in his affidavit evidence, but did deny in cross examination, that he said the above words. Mr Roger agreed that the division had not gone well; that a major account had been lost and that he did not raise with Mr Schot his understanding that he had permanent employment. He told Mr Schot he would be seeking legal advice and explained that he did not mention permanent employment, because:

Permanent employment is not a guarantee. Employment is an intent when you come into a relationship with an employer. Any employer has the right to deduct staff as they so wish. the conditions on which they then give notice is somewhat different.

62 The letter of 2 September advised:

Dear David,

As you are aware, a review of the activities of the Adsteam Marine group of companies has been made and the Board accepted the business plan presented for all agency divisions.

In view of the severe impact of the loss of the ExxonMobil account, amongst others, we need to review our level of administration of the Bulk Division.

After careful consideration, we regret to advise you of our decision not to extend or renegotiate the service agreement dated 11 October 1999. In this connection please refer to our notice of termination dated 14 April 2003.

As a result your last day of employment under the terms of the service agreement is 17 October 2003.

We understand that you may wish to pursue opportunities for future employment and as such agree to terminate your employment effective 2 September 2003 and enclose payment in lieu.

Please leave your mobile phone, lap top, pc and entrance card with Fran Newton. We shall make arrangements for the collection of your motor vehicle toward the end of September, exact date of which we will confirm in due course.

We sincerely regret that this decision has had to be made and would like to thank you for your efforts over the past four years.

Yours sincerely

63 In cross examination, Mr Schot agreed that he had never told Mr Roger that he was being made redundant. His impression was that the termination came as a shock to Mr Roger, even though it was not unexpected, given their earlier discussions and the notice of termination he had received in April.

64 Mr Roger was paid to 17 October, but received no other payment on account of redundancy, or any payment on account of notice, beyond that given as the result of the April letter. Nor was he paid anything in respect of shares.

Rejection of business record

65 The respondent had subpoenaed Mr Roger's personnel file from P&O and sought to tender a document from that file, on the basis that it was a business record admissible in accordance with s 69 of the Evidence Act 1995. The tender was objected to, as not satisfying the requirements of the section. I declined to receive the document, indicating that I would give reasons for that decision in my judgment.

66 The document was unsigned and undated. Its author was not apparent. It contained various calculations, made by reference to a date of termination of Mr Roger's employment on 31 August 1999. Mr Roger's evidence was that he resigned from his employment at P&O in September.

67 The objection to the document rested on the approach of Bryson J in National Australia Bank Ltd v Rusu and Ors (1999) 47 NSWLR 539. There his Honour refused the tender of two pages of a document comprising a transaction history for a particular bank account. No witness was called from the bank to identify that what was tendered was a copy of particular dealings. At [17] his Honour observed:

Before a business record or any other document is admitted in evidence it is obviously necessary that there should be an evidentiary basis for finding that it is what it purports to be. Documents are not ordinarily taken to prove themselves or accepted as what they purport to be; there are exceptions under the common law and under statutes for public registers and for many kinds of documents when certified in various ways: and see the method of proof provided in some cases by s 170 and s 171 of the Evidence Act 1995. At the simplest, the authenticity of a document may be proved by the evidence of the person who made it or one of the persons who made it, or a person who was present when it was made, or in the case of a business record, a person who participates in the conduct of the business and compiled the document, or found it among the business' records, or can recognise it as one of the records of the business.

68 His Honour was not concerned with the relevance of the document. The document was sought to be tendered as a business record pursuant to s 69 of the Evidence Act, which provides:

69 Exception: business records

(1) This section applies to a document that:

(a) either:

(i) is or forms part of the records belonging to or kept by a person, body or organisation in the course of, or for the purposes of, a business, or

(ii) at any time was or formed part of such a record, and

(b) contains a previous representation made or recorded in the document in the course of, or for the purposes of, the business.

(2) The hearsay rule does not apply to the document (so far as it contains the representation) if the representation was made:

(a) by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact, or

(b) on the basis of information directly or indirectly supplied by a person who had or might reasonably be supposed to have had personal knowledge of the asserted fact.

(3) Subsection (2) does not apply if the representation:

(a) was prepared or obtained for the purpose of conducting, or for or in contemplation of or in connection with, an Australian or overseas proceeding, or

(b) was made in connection with an investigation relating or leading to a criminal proceeding.

(4) If:

(a) the occurrence of an event of a particular kind is in question, and

(b) in the course of a business, a system has been followed of making and keeping a record of the occurrence of all events of that kind,

the hearsay rule does not apply to evidence that tends to prove that there is no record kept, in accordance with that system, of the occurrence of the event.

(5) For the purposes of this section, a person is taken to have had personal knowledge of a fact if the person’s knowledge of the fact was or might reasonably be supposed to have been based on what the person saw, heard or otherwise perceived (other than a previous representation made by a person about the fact).

69 At [21], His Honour observed:

If pages 25 and 26 are to be admitted the plaintiff must show (and

I abbreviate s 69):

(i) they are part of the records belonging to or kept by the Advance Bank in the course of its business;

(ii) they contain a previous representation made in the course of the business;

(iii) the previous representation was made by a person who had personal knowledge or on the basis of information supplied by a person who had personal knowledge.

70 At [26] his Honour concluded:

Section 51 does not abolish or in any way affect the need to prove that a document tendered is the document which it purports to be, and s 48(1) does not authorise the adduction of evidence merely by tendering a document in the absence of any evidence establishing what the document is. Section 48(1) is not an enactment to the effect that documents are to be received in evidence on the basis of what appears on their own face. Section 48(1) prescribes the means of adducing evidence of the contents of documents, and leaves untouched the need to establish that a document is what it purports to be; it does not mean that documents prove themselves, as if judicial notice must be taken of them.

71 At [34] his Honour noted:

If the court is to find a significant fact on which a large liability may depend, there is a need for the court to have some measure of confidence in the source of the court's belief that the fact exists. The court acts almost always on narrations which must have a human origin; not usually on the court's own knowledge or on states of fact which are taken to be incontestable. The balance of probabilities is not a demanding standard, as the possibility that the less probable state of fact may be the true one is very obvious, and makes civil justice very vulnerable to error. For the court to feel confident that it should act on any narration it is very important to have a human witness who has pledged, by oath or affirmation, that the narration is true: someone who is responsible for it. Business records may be incomplete; they often are. They record what there is perceived to be a business need to record, and that may be a small part or an oblique aspect of the objective event.

72 One matter here in issue between the parties was the date on which Mr Roger resigned from P&O. Adsteam also cross examined Mr Roger on the basis that he had been made redundant by P&O, rather than having resigned, which he denied. His evidence was that he had resigned some time after 7 September, after advising Mr Schot in August that he would accept employment with Adsteam. His employment had not been brought to an end by P&O.

73 The document was plainly relevant to these matters, but the admissibility of the document was challenged. No evidence was called from P&O, to show that the representations made in the document, particularly that the employment came to an end on 31 August as the result of steps it took, were made by a person who had personal knowledge of, or on the basis of information supplied by a person who had personal knowledge of, those representations. Other avenues available to Adsteam under the Evidence Act to address this issue, were not availed of.

74 For Adsteam, it was argued that P&O's production of the personnel file which contained the document, was itself sufficient to permit the admission of the document as a business record. Reliance was placed on the decision of Hamilton J in Drabsch v Switzerland General Insurance Co Ltd [1999] NSWSC 1030, where a fax was admitted as a business record, the document having been produced by the relevant business in answer to a subpoena. What was at issue was whether certain of the representations in the document were recorded in the course of, or for the purposes of the business. The representations were said to relate to entirely private, not business matters.

75 Hamilton J concluded that the representations referred to hospitality afforded in the course of the business, not in the course of any friendship or social relationship outside the confines of the business and that the representations were accordingly made in the course of, or for the purposes of the business.

76 In this case, I refused the tender of the document from the P&O personnel file, being satisfied that the requirements of s 69(2) had not been satisfied. The section requires that if the objection is taken, it must be shown that the representation in question can be traced back to a person who had personal knowledge of it. That was not here attempted.

77 Similarly to the circumstances with which Bryson J was dealing in National Australia Bank, mere answer to a subpoena requiring the production of business records such as a personnel file, was clearly not here sufficient to satisfy the requirement of s 69(2), in relation to the document here sought to be tendered.

78 There was no evidence led, which could satisfy the requirements of that part of the section. The mere production of the personnel file by P&O, could not give rise to the inference that the author of an undated, unsigned document in the file, showing various calculations of money sums payable, if P&O terminated Mr Roger's employment on a particular date, had the required knowledge of the representations made in the document. Furthermore, the inference that P&O had terminated the employment on the date the calculations referred to, could not flow from the document, even if it were admissible. At best, the inference that P&O had considered doing so, could arise.

79 The approach of Hamilton J in Drabsch, could not lead to any other conclusion. His Honour was not there concerned with the requirements of s 69(2)(b), which were not in issue in the case. Rather, it was whether the representation in question was recorded in the course of, or for the purposes of the business, as s 69(1)(b) requires. His Honour considered the point, after cross examination of a witness about the document. In this case, no such evidence was called and the requirements of s 69(1)(b) were not in issue, in any event.

The parties' respective cases

80 The case advanced by Mr Sleight of counsel for Mr Roger, was that the contract was unfair, in failing to provide for 75,000 shares after one year's service, as had been promised when Mr Roger was headhunted from his position at P&O. The evidence of the respondent's conduct in relation to what had been promised, revealed the unfairness of the contract. The August offer letter could not be fairly read as a mere offer of participation in the share scheme. That had been offered and rejected in May. The later offers were improvements, designed to induce acceptance of the position at Adsteam.

81 The idea that the scheme was anything other than as Mr Frederick had described it in his affidavit, namely a scheme which operated retrospectively, only came through the evidence of Mr Frederick proffered in cross examination. It would not be accepted. It was inconsistent with all of the other evidence as to how the scheme operated, including the share scheme documents and the evidence given by Mr Schot, as to its operation.

82 Mr Roger's understanding of what was offered, was submitted to be available on the terms of the letters and consistent with the evidence of Mr Schot's understanding of what was being offered, he being the author of the final offer.

83 Mr Frederick's later failure to put the matter of the promised shares before the board, or even to respond to Mr Roger's repeated enquiries as to when the promised shares would be forthcoming, but confirmed the unfairness of the contract, which failed to make any provision for the promised shares. This was argued to be a staggering approach, in the context of the offers made and accepted and Mr Roger's pursuit of what he had been promised.

84 Relief by way of variation and money orders was pressed.

85 As to the contractual termination provisions, it was submitted to be unfair that the fixed term nature of the contract was not revealed to Mr Roger, until after he had accepted the offer made in August. It was argued that Mr Schot's evidence of his understanding of the contract, also confirmed Mr Frederick's representation, that the employment would be ongoing. The purported notice of termination he gave in April, showed that Mr Schot did not really accept that the service agreement governed Mr Roger's engagement. In truth, the contract was for no fixed term and should have been brought to an end by the giving of reasonable notice. In failing to provide for any period of notice, the contract was defective and the notice given, was not adequate, in the circumstances of the redundancy.

86 Furthermore, the explanation given for the first time in September, that Mr Roger was, in reality, being made redundant, underlined the unfairness of the contract in relation to termination.

87 A variation to require payment of six months' notice in the event of redundancy, at the package rate, was pressed.

88 The case advanced by Mr Clark of counsel for Adsteam, was that the evidence demonstrated that the service agreement had been supplied to Mr Roger before he resigned from his employment and that accordingly, his claim that he had been forced to accept those terms, because he was then in an unequal bargaining position, would be rejected. That evidence was also directly contradictory to Mr Roger's other evidence, that he had been reassured by Mr Frederick, before he signed the agreement, that the three year term provided in the agreement would not apply to him. It was impossible for Mr Roger to have been in both of those positions. They were entirely inconsistent.

89 As to his understanding of the offer made in relation to shares, Mr Roger's evidence in cross examination showed that at the time of the offers, he did not have an understanding that what was being offered was anything other than shares in the share scheme. The offer letters, when understood in context, demonstrated that this was how the offer was put and understood, consistently with the service agreement later signed, which referred to the share scheme.

90 It was, in any event, objectively impossible to accept that the applicant was being offered an outright grant of shares worth $180,000, in the context of this employment.

91 If the respondent's construction of the offers was rejected, the only other interpretation of the offer available was that 75,000 shares would be received under the share plan, irrespective of performance. If that construction were accepted, the shares were worth nothing, given that the loan provided to Mr Roger for the shares under the scheme, would have been repayable on termination, at which point the value of the shares had fallen. This meant that the sale of the shares would not have realised an amount sufficient to repay the loan, which would have been forgiven on termination, in accordance with the terms of the scheme.

92 As to the fixed term of the contract, it was submitted that no unfairness had been demonstrated. To the contrary, Mr Roger had been given six months notice, to which he was not strictly entitled. The applicant had not demonstrated either that he had been in a position of unequal bargaining power under the contract, or that Mr Frederick had promised him permanent employment. It was unlikely that if Mr Frederick had made such a promise, that Mr Roger would not have asked Mr Schot to ensure that the service agreement reflected what Mr Frederick had promised, before he signed it. After all, he was otherwise tenacious in pursuit of his negotiations.

93 When the contract was later extended by a year, Mr Roger also never raised the suggestion that in truth, he had permanent employment. On the one hand he insisted that when this proposal was put forward by Mr Schot, he had no alternative but to accept it. On the other, his evidence was that the extension was ineffective, because he understood that he was in fact employed on a permanent basis. Again, the evidence was entirely contradictory and would not be accepted.

94 In any event, even if the contract had provided for ongoing employment requiring reasonable notice, six months' notice was in fact given, even though the contract would have expired in accordance with its terms, without any notice. In all the circumstances in which this employment came to an end, such a period of notice was more than adequate.

Consideration

95 The fundamental question to be determined in these proceedings, is whether the applicant has established, to the requisite degree, that the contract in question was unfair, as that term is to be understood, given the definition appearing in s 105 of the Act. On the evidence, there can be no question that the case was made out.

The share claim

96 The evidence revealed that in headhunting the applicant to the position, the respondent couched its revised offers in a way designed to induce Mr Roger to leave P&O and to join it. Those offers made it appear that Mr Roger would be granted 75,000 shares, after completing one year's employment, subject only to the formality that the board confirm what had been offered, once the employment had commenced.

97 True it is that the first revised offer made in June, explained that what was being put, was 'to clarify the share plan as it would affect your good self', Mr Frederick having already explained the scheme to Mr Roger. There can be no doubt, on the evidence, that what was then offered, was entirely inconsistent with Mr Frederick's earlier explanation of that share scheme, and how it operated.

98 It seems to me quite understandable that the applicant understood from the June letter that he was being offered 75,000 shares, rather than the mere possibility that the board might invite him to participate in the share scheme, without any promise as to any number of shares and only in the event that his performance, and that of the Company, satisfied unknown criteria, entirely at the board's discretion, in the future. Mr Roger had no complaint about the fairness of the share scheme, as it had been explained to him, but in May had already received and rejected an offer which included the possibility that in future, the board might invite him to 'take up a parcel of shares which are then paid for by dividends'. It was not surprising that he understood an offer of '75,000 shares on completion of your first year', subject only to this being formally passed by the board once he had joined Adsteam, to be both an improvement on the earlier offer and to be offering something quite different.

99 Nor was it surprising that he thought that the June letter might have had words missing. If read literally, the clarification of the share scheme was that it was not to apply to him at all. What he was being offered by way of shares was 75,000 shares after one year's employment and nothing more. That he understood that he was being offered an extra inducement, was not surprising.

100 The evidence suggested that Mr Schot, in reality, had a similar understanding. That understanding was reflected in the second offer made in August, which unlike the June letter, made no reference at all to the share scheme.

101 Mr Richards, the author of the May and June offers, explained that this was the first occasion on which he had been involved in recruiting a senior member of staff to Adsteam, to whom the provisions of the Adsteam share scheme would apply. He was not even aware of the existence of the scheme, until informed of it by Mr Frederick. The letter of 26 May was drafted to reflect what Mr Frederick had told him about the scheme. Mr Frederick agreed that he had discussed the letter with Mr Richards, but he did not see it, before it was sent. That letter referred to the share scheme in terms consistent with the explanation Mr Frederick had earlier given to Mr Roger, as to the operation of the scheme, when he had first approached him about the possibility of Mr Roger leaving P&O and joining Adsteam, namely that the scheme was entirely discretionary.

102 The revised offer of 9 June was also written by Mr Richards, after further discussion with Mr Fredrick. While they both gave evidence that they intended to offer shares under the share scheme and while the offer was said to 'clarify' how the share scheme would apply to Mr Roger, the terms of the offer were inconsistent with that intention. After all, in conveying the revised offer as to shares, the idea that the 75,000 shares offered after a year's employment, was, nevertheless, entirely discretionary; in accordance with the general share scheme, the number of shares to be offered would be assessed by the board after consideration of both Mr Roger and Adsteam's performance; and if offered, were to be purchased by Mr Roger on the basis of the loan arrangements under the share scheme; and would have to be sold on termination, were not adverted to at all. Again, Mr Frederick did not see the letter before it was sent.

103 Mr Richards' evidence was that he had not intended to convey in the letter, that the offer of shares was not part of the standard share scheme. He, of course, was not familiar with the scheme. He had written the letter in accordance with Mr Frederick's instructions.

104 After Mr Richards' retirement, it was Mr Schot and Mr Frederick who, together, made decisions about what was being offered to the two candidates, Adsteam was then considering. They were both well familiar with the scheme.

105 On Mr Schot's evidence, the scheme did not permit any specified number of shares to be promised in advance of the board's assessment of individual, division and group performance. He was not aware of how the offer of 75,000 shares had come to be made by Mr Frederick in June. He did not understand the scheme to permit the board to be bound by any such promise, without its prior approval. He thought the matter must have been discussed between Mr Frederick and Mr Roger. It was not. Nor was board approval sought.

106 Mr Fredrick's explanation as to how the offer was possible, in these circumstances, was that he was able to nominate the 75,000 shares specified, because the board made share allocations under the scheme in accordance with his recommendations. He was accordingly in a position to be able to indicate what share allocation would be made by the board to Mr Roger. He had not, however, intended to offer 75,000 shares outright to Mr Roger. Adsteam did not ever allocate shares in that way. Mr Frederick revealed none of this to Mr Roger.

107 Mr Schot was the author of the final offer of 6 August. He did not discuss the terms of the letter with Mr Frederick, who again did not see it before it was sent, although they had earlier discussed the final offer Adsteam was prepared to make Mr Roger. Mr Schot and Mr Frederick differed in their evidence, as to whether they had discussed the offer of 75,000 shares. Mr Frederick's evidence was that they had, Mr Schot's that they had not. I am inclined to prefer Mr Frederick's recollection. It is consistent with Mr Schot's earlier email to him about the respective offers being made to the two candidates, with the 75,000 shares being offered to Mr Roger described by Mr Schot as 'buying him' and with both Mr Schot and Mr Frederick's evidence, that in June, they had discussed the state of the negotiations with Mr Roger and the applicant Mr Schot preferred.

108 In comparing the respective offers made to the two candidates in his email to Mr Frederick, Mr Schot described the offer to Mr Roger then standing as including 'plus 75,000 shares after one year', an offer which he described as 'buying David away'. There was no evidence that Mr Frederick disagreed with this. If, in truth, nothing more was being offered than the possibility that the Adsteam board might in future exercise a discretion in Mr Roger's favour under the share scheme, to grant him an unspecified number of shares, as it might in respect of any other member of the executive staff to whom that share scheme applied, nothing was in fact being offered, or bought. Indeed, as Mr Schot agreed in cross examination, the position of the other applicant would have been identical to that of Mr Roger - they were each entitled to participate in the scheme if they accepted the offer of employment. That, however, was not how the offers made to the two candidates had been approached by Adsteam, nor how the position of the two candidates was compared at the time, by Mr Schot.

109 After the preferred candidate rejected the offer and Mr Roger was pursued further, Mr Schot drafted the August letter by reference to what had already been offered in the May and June letters and no doubt, his discussions with Mr Frederick.

110 The August letter again offered 75,000 shares after one year's employment, subject to board formalisation, after the employment commenced. This time there was no reference at all to the share scheme. There was simply no basis under that scheme upon which a figure of 75,000 shares was available to be offered, as Mr Schot acknowledged in cross examination. I am satisfied, on the evidence, that it was an offer entirely inconsistent with the scheme. The letter contained the offer Adsteam was prepared to make by way of shares, in order to 'buy' Mr Roger.

111 Mr Frederick's evidence in cross examination raised for the first time, the idea that the share scheme could not only encompass the board exercising a discretion to grant shares, having regard to personal and company performance at particular times judged by the board on a retrospective basis, but that share allocations could also be made prospectively under the scheme, on commencement of employment. This was a matter which Mr Frederick allegedly discussed with Mr Roger, when describing the scheme at their first meeting.

112 I am unable to accept that evidence. It was simply not credible that such an important aspect of their original discussion should have been entirely omitted from Mr Frederick's affidavit evidence, to emerge only in cross examination, when it seemingly occurred to him for the first time. That matter had not been put to Mr Roger in cross examination. Mr Frederick's affidavit evidence was that his explanation of the scheme to Mr Roger was in accordance with his usual practice, of explaining the scheme's operation to candidates. If prospective share allocations were truly a feature of the scheme, which he usually explained, no doubt he would have mentioned it in his affidavit evidence.

113 When pressed, Mr Frederick explained that he had omitted this part of the conversation from his affidavit, because he was not 100% sure that it had been said. That explanation was regrettably unconvincing, as were other aspects of his evidence in cross examination about this aspect of the evidence. The explanation smacked of recent invention. It was not a part of the respondent's case to that point. Nor had it been put to Mr Roger, even in cross examination. Had the scheme truly operated in that way, one would have expected some mention to be made of it in the scheme documents and for Mr Schot to have given his understanding as to this aspect of the scheme, when cross examined. He did not. Furthermore, one would have then expected that the offer of 75,000 shares after a year's employment, would have gone to the board for its approval, once Mr Roger had joined Adsteam, as the letters offered. That did not occur.

114 On the evidence, the scheme involved employees being offered the opportunity to participate, buying the offered shares at market value; the company loaning the employee the funds and the loan being repaid from dividends, or by the employee. The attraction of the scheme was the possibility that the shares would increase in value over time. There was a three year restriction period and the loan had to be repaid within 15 years. The shares had to be sold and the loan repaid, if the employment was terminated. If the shares had fallen in value, anything outstanding on the loan, which was not recouped by the sale of the shares, was not recovered from the employee.

115 In their initial discussion, Mr Frederick indicated that he would be prepared to recommend Mr Roger's participation in this scheme, 'when the next allocation becomes due'. The offer of 26 May was consistent with this discussion, but it was not attractive enough to tempt Mr Roger.

116 There were several improvements in the second offer, including 75,000 shares after one year's employment. That this offer was not intended to be subject to the limitations of the share scheme, can be seen from various things, including the timing of the proposed share acquisition - after one year's employment, rather than when the next allocation became due. On Mr Frederick's evidence, share allocations under the scheme were made mid-year. The June offer, however, promised 75,0000 shares after one year's employment - the date of commencement later agreed being 18 October.

117 The 26 May letter also dealt with Mr Roger's participation in the discretionary bonus scheme. In the 9 June letter, that matter was not referred to. Mr Schot referred to it again in the 6 August letter as ' annual bonus - at the Company's discretion as mentioned in our letter of 26 May 1999.'

118 The August letter made no mention of the share scheme at all, or that the company was seeking to retain any discretion in relation to the promised shares. To the contrary, it assured Mr Roger the offer of '75,000 shares on completion of your first year with the Company', it being noted that this would have to be 'formally passed by the Board, once you have joined us.'

119 I am well satisfied that this could not reasonably be read as implying that it was open to the board to decide to offer no shares at all at the end of a year; or that the offer was otherwise subject to participation in the share scheme, of which no mention was made. The representation was that the necessary board approval was a formality, to be completed if the employment was accepted.

120 Once the offer of employment had been accepted, the contract was formalised, by adoption of a service agreement, in standard terms. The agreement was prepared by Mr Schot. Despite being the author of the August letter, the agreement failed to make any reference at all to the promised shares. In failing to do so, the contract was plainly unfair. Its terms permitted Adsteam then to embark on a course of conduct, which was quite unconscionable. In so permitting, the contract was also relevantly unfair. Mr Roger's evidence was that he discussed the failure to refer to the shares with Mr Frederick and was reassured by him. I accept that evidence. Mr Frederick could not recollect the conversation, but did not deny it. Mr Frederick's assurances came to nothing.

121 Even on the respondent's case, contrary to what had been promised, Mr Frederick never put to the board for 'formalisation' that Mr Roger be allocated 75,000 shares after a year's employment under the share scheme, after the employment commenced. Nor did he raise the matter with the board, in mid-2001, when share allocations were generally made, or even at the end of 12 months of employment in October. Mr Frederick never made any recommendation that any shares be allocated to Mr Roger under the scheme, or otherwise. Mr Frederick explained that in 2000, he did not do so, because of the company's performance at that time and his discussions with the managing director, from whom it became clear, that the board would not accept any recommendation from Mr Frederick, that any shares be granted under the scheme at that time.

122 Mr Frederick never explained this to Mr Roger. To the contrary, when Mr Roger pursued the matter with Mr Schot, who referred the inquiry to Mr Frederick, Mr Frederick assured Mr Roger that he would look into the matter and would 'revert' to him. He did neither.

123 Had, in truth, the position been as the respondent asserted in its case, that all that Mr Roger had ever been promised was participation in the share scheme, one would have expected Mr Frederick to explain to Mr Roger, in accordance with that understanding, that no allocations were to be made under the scheme at all that year and that his position had been dealt with accordingly, consistently with what he had been promised. Mr Frederick did not so. He did nothing, either to deal with what had been promised, to draw it to the Board's attention, or to advise Mr Roger as to what the position was.

124 When Mr Roger pursued the matter again, instead of then giving him the obvious and available explanation, Mr Frederick apologised for the delay and again promised to look into the matter and get back to Mr Roger. Again, he did nothing. All he did was to fob Mr Roger off. That approach was entirely inconsistent with an understanding that all that Mr Roger had been promised was participation in the share scheme.

125 The representations which induced Mr Roger to accept the employment Adsteam offered and to leave P&O, had serious financial consequences for him, but were later ignored by those who had made them. The board formalisation promised was not pursued, when the employment commenced, after the first year's employment had been completed, or on any of the occasions Mr Roger pursued the matter with Mr Schot and Mr Frederick. Undoubtedly, that was because what had been promised was then inconvenient. The company's performance was faltering, no share allocations had been made to other executives under the scheme and the company was even in dispute with Mr Schot, over shares which he had apparently also been promised.

126 The upshot was that the board was never informed of what Mr Roger had been offered to leave P&O and join Adsteam. It never had the opportunity to consider what was appropriate to do in the circumstances.

127 Mr Roger was cross examined as to his understanding of what had been offered, it being suggested that an offer with a value of as much as $180,000, was unbelievable in the circumstances of the employment he was being offered and the course which the negotiations took, with the respondent refusing the life insurance which Mr Roger was pursuing, worth only an additional $5,000. Mr Roger explained why he did not take that view - given what he was giving up at P&O, to accept the employment. Mr Frederick's evidence that he was able to make the offer, given that the board's practice was to accept his recommendations and he was aware of what was likely, given his experience with others at a similar level. That evidence also showed that the offer was not an absurd one, so far as the value of the shares were concerned, in the circumstances. Mr Schot agreed that although unusual, it was an offer Adsteam could make. In that context, that the company was not prepared to further improve its offer by another $5,000, was understandable. As Mr Frederick told Mr Schot, these protracted negotiations had to stop at some point.

128 I am entirely satisfied on the evidence that the contract was unfair in failing to provide for the promised shares. Mr Roger left his employment of 31 years with P&O, understanding, that subject to board formalisation after he joined Adsteam, he would receive 75,000 shares after one year's employment. The respondent did not understand itself bound to honour that promise. That this was an extremely valuable promise, which the respondent later came to regret, is not a basis upon which the relief sought can now be refused.

129 There was a disagreement as to the money orders which should flow from that conclusion. The summons sought a money order calculated by reference to the value of the shares, as at the date the summons was filed. At the hearing, a calculation as at October 2001, when the shares should have been allocated, was pressed. Other dates were also canvassed. Other possible dates include the date of termination of the employment, or the date of the judgment.

130 The respondent argued that there should be no money order, even if the view were reached that the 75,000 shares should have been granted. It was argued that even if the respondent's construction of the offer letters was rejected, it would be concluded that the shares should have been granted under the scheme. In that case, the shares would have been funded by a loan, repayable by Mr Roger on his termination of his employment. At that stage, the value of the shares had declined, with the result that the sale of the shares would not have repaid the loan, which would then have been forgiven.

131 I have, for the reasons already explained, rejected that approach. I am satisfied that it is not consistent with the way in which the offer was either made, or understood.

132 In the alternative, if the applicant's claim succeeded, it was argued by Adsteam that a value assessed as at the date on which the shares should have been allocated in October 2000, was not appropriate, because it was unlikely that Mr Roger would have sold the shares then. Other approaches urged were the date sought in the summons, or the date on which the shares had the least value.

133 I am satisfied that the just approach in the circumstances of this case, is that the money orders should be calculated by reference to the value of the shares as at the date of judgment. It is at that time that the right to the shares is created by the Court's order and the consequential money order flowing from that variation to the contract must be assessed. This approach involves no artificial determination of when the value of the shares might have been realised by sale, if the promise made had been honoured. The value of the shares as at that date, is a figure readily identifiable by the parties, they already having put before the Court agreed information as to the value of the shares up to 2005. On that approach, there is no necessity to consider the interest claim.

134 The resulting calculation should be done by reference to the same information and approached, if necessary, on the basis of an average between the two monthly figures provided, for the month in which the judgment is given, if a daily figure is not available. I will order accordingly.

The notice claim

135 I turn then to the notice claim. The applicant's case was advanced in a number of ways. I am satisfied that none of them were made out.

136 As the offer of 26 May made clear, the parties expected that their contract would be formally documented. Mr Roger told Mr Schot on 19 August that he would accept the employment offered and they discussed how it would be formalised. Mr Schot explained to Mr Roger that the company had a standard service agreement. He provided the draft to Mr Roger a few days later.

137 Mr Roger was unhappy with the three year term provided in the agreement, as he then told both Mr Schot and Mr Frederick. Contrary to the case first advanced, Mr Roger conceded in cross examination that he became aware of that aspect of the contract offered, before he resigned from P&O, after 7 September. On the evidence, I am satisfied that Mr Roger discussed his concerns about this aspect of the agreement, with both Mr Schot and Mr Fredrick, before he resigned from P&O. This was inconsistent with Mr Roger's other evidence, that he finally accepted what was offered in relation to the term of the contract, because he was then in an unequal bargaining position and had no choice but to accept, because he had already resigned at that point. I am unable to accept that evidence.

138 When he discussed the matter with Mr Frederick, before his resignation from P&O, Mr Roger came to understand that a three year fixed term was a standard term for senior executives at Adsteam. Mr Schot had given Mr Roger similar advice. Understanding this, Mr Roger did not seek to negotiate the term further. He also later obtained legal advice about the agreement, before he executed it. He did not, however, seek specific advice in relation to the term of the agreement, because he explained that in the meantime, he had been reassured by Mr Frederick, that this aspect of the agreement did not really affect him. I am also unable to accept that evidence. Such an understanding cannot reasonably have flown from what Mr Frederick said, on either Mr Roger's or Mr Fredrick's version of the conversation, which are both earlier set out.

139 I am well satisfied that, in reality, Mr Roger understood that he was being offered the same fixed term employment as that of other Adsteam executives and that he was prepared, in those circumstances, to accept what was offered, understanding that he was not being treated differently. I am unable to accept that in truth, he understood Mr Frederick to have assured him that the express terms of the agreement would not apply to him and that instead, unlike other executives, including Mr Schot and Mr Frederick, he would have permanent ongoing employment. Mr Roger's subsequent conduct was entirely inconsistent with such an understanding.

140 In August 2002, Mr Schot offered to extend the term of the employment for one year, in circumstances he then explained, namely the difficulties facing the division, including the uncertainty existing in relation to a major customer. Mr Roger agreed, it appears without discussion or complaint. On the evidence, the difficulties which Adsteam and the business Mr Roger was heading then had, were plainly no secret from him. He had himself had a number of unsatisfactory performance reviews, no doubt affected by the state of the business. Mr Roger's evidence was that he raised no objection to this one-year extension, because he was in no position to dispute it. To the contrary, it was obviously to his advantage. Without that agreement, his employment would have come to an end in October 2002.

141 Mr Roger also gave evidence that he was, in any event, not really worried about this purported extension, because of Mr Frederick's assurance that he had ongoing employment. That evidence was inconsistent with a view that he had no option but to accept what had been offered by a one year extension. If, in truth, Mr Roger believed that he was not employed on the basis of the fixed term provided in the agreement he had signed, it seems entirely unlikely that he would not then have raised his understanding as to the true basis of his employment, with Mr Schot and Mr Frederick.

142 In April 2003, Adsteam gave Mr Roger six months' notice of the termination of the employment. As Mr Schot explained in cross examination, this was strictly unnecessary, given the terms of the agreement, but he believed it fair to do so in the circumstances. Mr Roger did not complain about this at the time.

143 In these proceedings it was asserted that the notice given was ineffective. I am unable to accept that submission. If, in truth, the employment had been on the basis of ongoing employment, as was Mr Roger's assertion, the notice given was effective to have brought the employment to an end, at the expiry of the notice period. I, however, accept Mr Schot's evidence, that he gave the notice because in his view, it was the fair course to take in all of the circumstances at that time, even though given the fixed term nature of the contract, there was no contractual obligation to do so. Mr Schot's evidence did not demonstrate any misunderstanding of the nature of the arrangement, or, conversely an understanding that the employment was, in reality, permanent and ongoing. Given the ongoing problems of which Mr Roger was well aware, it was undoubtedly fair to give him notice that Adsteam would not be offering to further extend his contract.

144 The contract was due to come to an end in October 2003. In September, Mr Schot confirmed that the contract would come to an end, as had already been foreshadowed. Mr Roger was not required to work out the balance of the term. Again, Mr Roger did not at that stage raise with either Mr Schot or Mr Frederick, his understanding that he had been employed on a permanent, ongoing basis. If, in truth, he had that belief at the time, no doubt he would have raised it. He did not.

145 It was complained that in these circumstances the contract was unfair and should be varied to require the payment of a further six months severance in lieu of notice, it being argued that in truth, the termination arose in circumstances of redundancy.

146 It is convenient to observe at this point, that during the course of final submissions, leave to amend the summons was sought, in order to seek a further variation to the contract, requiring reasons for termination to be given, in the case of redundancy. That leave was opposed and declined, I taking the view that it was entirely too late a stage in the proceedings, to make the amendment sought.

147 The application arose out of cross examination of Mr Schot and whether his explanation for the decision to terminate, when he spoke to Mr Roger in September, had been discussed earlier with him. Mr Schot explained that it had, on many occasions. Mr Roger had himself given no evidence about these matters to that point, and they were not raised by way of complaint in the summons.

148 The evidence was that earlier during the employment, Mr Schot had considered terminating Mr Roger's employment, because of dissatisfaction with his performance. While his first performance review had been satisfactory, subsequent reviews had not. The division which he was employed to lead had not performed adequately and the letter of termination advised relevantly:

...

In view of the severe impact of the loss of the ExxonMobil account, amongst others, we need to review our level of administration of the Bulk Division.

After careful consideration, we regret to advise you of our decision not to extend or renegotiate the service agreement dated 11 October 1999. In this connection please refer to our notice of termination dated 14 April 2003.

As a result your last day of employment under the terms of the service agreement is 17 October 2003.

...

149 This advice harked back to Mr Schot's discussion with Mr Roger in August 2002, when the one year extension was agreed. Then discussed were prevailing circumstances in the division and the uncertainty of the ExxonMobil tender. I am satisfied, on the evidence, that the reason for this termination was that given in the letter, namely the need to review administration, in view of the severe impact resulting from the loss of certain accounts. These were part of ongoing difficulties which Mr Roger and Mr Schot had earlier discussed. No one advanced any other explanation for the termination, at the time of the termination or subsequently. Mr Roger did not complain about the decision at the time he was informed of it, nor did he suggest that it had no proper foundation, or that it resulted from circumstances about which he was unaware. Mr Roger's complaint always revolved around the notice he received.

150 The fairness of what was agreed in that respect, must be assessed in the context that this was a fixed term contract, initially agreed for three years and then for a further year, subject to earlier termination on six months notice, after two years. The agreement did not deal separately with termination on account of redundancy. The question of whether the contract was unfair, in not making such provision, must be approached in the context of the terms of the contract and what it permitted, in accordance with those terms.

151 There is nothing inherently unfair in a fixed term contract of employment. In differing circumstances, such an arrangement can have advantages and disadvantages, both for employers and employees. In a case of redundancy, a fixed term contract can, in reality, result in an employee having longer employment, than would be the case, in the absence of an agreement to a fixed term. Here, for example, the fixed term would have ensured that Mr Roger had at least two years' employment, if the business had fared so badly that Adsteam decided to restructure in the first two years of Mr Roger's employment. These are matters which parties to such contracts no doubt consider and weigh, in the course of their negotiations.

152 In some cases, parties agree to a fixed term, subject to some limited rights of earlier termination. This was such a contract. Again, such a contract can have advantages and disadvantages for employers and employees. It is, after all, not only employers who may act to bring such a contract to an end.

153 This contract, while initially for three years, was in a practical sense fixed for only two. Thereafter, it was terminable on six months' notice. Once the employment was extended for a further year, it was terminable at any time in that year, on six months notice. That extension was agreed, at a time when the business Mr Roger was heading, was not prospering, as he plainly knew. That there would be no further extension offered during that year, was obviously a possibility Mr Roger confronted, when he accepted the extension. In the end result, six months' notice was given in April, expiring at a time shortly before the contract would have come to an end, in any event, in accordance with its own terms. I accept that while this was not strictly necessary, given the contractual terms, it was the fair approach to adopt. That there would be no further extension offered was confirmed in September and no further work was required, for the balance of the employment.

154 While Mr Roger complained in these proceedings that the reason for the termination, redundancy, was not explained until September 2003, I am unable to accept that complaint on the evidence. Nor can I find that the fixed term nature of the contract, or the six months' notice of termination given, made this aspect of the contract unfair, as that term is defined in s 105.

155 Mr Roger was a very senior and experienced executive, headhunted from his position at P&O, after 31 years service. The negotiations extended over a considerable period, while Mr Roger satisfied himself as to whether or not he was prepared to accept what was being offered.

156 While he complained in these proceedings, of being in an inferior bargaining position vis a vis Adsteam, both when the employment commenced in 1999 and when he accepted a one year extension in 2002, the evidence showed that he had the upper hand in the negotiations in certain respects. Adsteam had acquired a new business, which it was seeking to integrate into its own business and to expand; it was anxious to recruit a new senior manager to head that business and had been looking for a suitable candidate throughout 1999. Mr Frederick approached Mr Roger personally in April, no other candidate having been identified to that point. Mr Roger rejected the offer made in May, but invited further discussions, seeking improvements in the offer. Adsteam did identify another candidate, but was unsuccessful in attracting the other candidate, who it came to prefer, and to whom no inducement in the form of shares had been offered. The end result was that it was prepared to pay a considerable price, to attract Mr Roger to the job, as I have found.

157 On his evidence, Mr Roger was attracted to the new position, by the challenge it would provide him, however, he was not prepared to entertain Adsteam's approach, other than on very attractive terms. He understood the shares he was ultimately offered to be of very considerable value, as they undoubtedly were. That made the offer attractive and it was this, together with the balance of the terms offered, which he well understood before he accepted them and resigned from his employment with P&O, which finally provided him with the necessary inducement to accept the offer.

158 Before he came to that acceptance, Mr Roger was unhappy, when he understood, in August 1999, the fixed term nature of the position he was being offered. This was apparent from the standard service agreement he was given. The parties had earlier discussed standard terms, although they had been first described by Mr Richards as taking the form of a letter of appointment. A fixed term appointment had not, however, been discussed to that point. Mr Roger expected ongoing employment, given the nature of the business Adsteam wanted to create and the position he was being offered.

159 Despite Mr Roger's unhappiness with that aspect of the standard service agreement, Adsteam was not prepared to offer any more favourable terms in that respect, that being the basis on which it employed all its executives. Mr Roger discussed this with both Mr Schot and Mr Frederick before he resigned from P&O after 7 September.

160 When seeking legal advice, Mr Roger did not pursue the question of the term of the agreement. On the evidence, there can be no doubt that Mr Roger understood what he was being offered - a fixed term for a similar period to that applying to other Adsteam executives, with remuneration commensurate with what other executives received, but with a very valuable inducement to join Adsteam, in the form of shares to be received after 12 months employment - worth considerably more to him than a year's remuneration. Adsteam did later agree to an alteration to its standard terms, by addition of a dispute resolution clause, which Mr Roger pursued after he had taken legal advice. He did not pursue any other alteration.

161 The upshot was that Mr Roger decided to accept what had been offered, given, no doubt, the continuing attraction of the total package. The evidence confirmed that Mr Roger could have refused the employment, before he had resigned from P&O, if the fixed term nature of the contract was unacceptable to him. He accepted it.

162 I am well satisfied that Mr Roger made a considered decision to accept that offer, which he found attractive, despite the potentially limited period of the employment. He was plainly content to take the risk that he and Adsteam would come to agree that the employment should continue after the three year term offered. As it transpired, that was the result, despite concerns about Mr Roger's performance, and the fact that the business he had been headhunted to lead, was not prospering. It was also then facing the loss of a significant client. A further one year term was offered for reasons then explained to Mr Roger. Again, this was to Mr Roger's advantage. It gave him another opportunity to negotiate ongoing employment. The business did not prosper. The client was lost. He was not offered ongoing employment. Nor did he seek it, in the end result.

163 In accordance with the service agreement terms, the employment would have came to an in October 2003, without any notice being required. As a matter of fairness, Mr Schot gave Mr Roger six months' notice in April 2003, because, as he explained, he thought that the fair course to take in all the circumstances.

164 Mr Schot also then revisited the question of the continuation of the contract in September 2003, but told Mr Roger he could not offer any further employment, for the reasons he then explained. I have found that Mr Roger was well aware of those circumstances before that point. Mr Schot did not require Mr Roger to work out the balance of the employment - a period of about six weeks, in all the circumstances.

165 I am unable to accept, on all of this evidence, that justice permits a conclusion that this contract was unfair, in not providing for an additional period of notice and severance, in addition to that which Mr Roger received. Mr Roger, plainly took a calculated decision to accept a three year fixed term contract, as the result of the process of negotiation the evidence revealed. The business he had gone to Adsteam to head, did not prosper and so he was not offered employment, ultimately, beyond four years. He received six months confirmation that this was when the employment would end. Undoubtedly, the contract could have been more generous from Mr Roger's perspective. What must, however, be demonstrated in proceedings such as this, is that the contract was relevantly unfair.

166 I am unable to reach that conclusion. Adsteam paid a considerable price to attract Mr Roger to its employment in the new business it was establishing. He took a chance that the employment would continue beyond three years. That ongoing employment would depend on the success of the business he was to lead, was entirely obvious.

167 The employment came to an end after Mr Roger had accepted a one year extension of the contract, at a time when he had had a number of unsatisfactory performance reviews and where the business he was heading had not prospered. I am satisfied that these circumstances do not provide a basis where the conclusion that the contract was unfair, in relation to notice in circumstances of redundancy, may properly be reached, particularly having in mind the purpose which redundancy provisions serve, a matter not addressed in the applicant's case, no doubt for good reasons in these circumstances.

168 Barwick CJ in Stevenson v Barham (1977) 136 CLR 190, cautioned at 192, that in exercising the jurisdiction granted by s 88F of the Industrial Arbitration Act 1940, a predecessor to s 106 of the Act, the Court should not interfere with 'bargains freely made by a person who is under no constraint or any inequality, or whose labour was not being oppressively exploited'.

169 In Davies & Anor v General Transport Development Pty Ltd [1967] AR (NSW) 371 at 375, Sheldon J observed that the section's 'massive power', should not be used to permit the section to become a 'refuge for those who are merely disgruntled with a bargain entered into on even terms'. The evidence does not permit the conclusion that Mr Roger was the victim of any fraud, deceit, or other unconscionable dealing, in relation to the fixed term nature of his employment contract, at the time it was made. That it later came to an end in the circumstances and for the reasons disclosed on the evidence, has not revealed any relevant unfairness in the contract. This aspect of the claim has not been made out and must be declined accordingly.

170 In any event, even if Mr Roger had made out on the evidence, that his contract was on an ongoing permanent basis as he asserted, rather than for the agreed three year period, the conclusion that the six months' notice given in April 2003, was not reasonable or fair in all of the circumstances here revealed on the evidence to bring the employment to an end, was in my view not open. That conclusion flows both from the reasons for the termination and other relevant criteria, such as Mr Roger's age, position, remuneration and the circumstances in which he came to be employed and the notice he was given. In extending the contract by a year, Mr Roger in fact had a year's notice that unless a further period of employment was offered and accepted, the employment would come to an end in October 2003. Furthermore, he had six months' confirmation that this would not happen. I have no doubt that given the difficult position the business was facing, the need to turn it around and what would occur if it did not, were quite apparent to Mr Roger.

171 As the case was advanced, to come to deal with the case on this basis, it would have been necessary to conclude not only that the contract in truth provided for permanent ongoing employment, but that the contract was unfair, in providing expressly for a further period of six months' notice to be given, in order to bring the employment to an end, in circumstances of redundancy.

172 That conclusion was simply not open. Mr Roger's evidence was that he understood that Mr Frederick had assured him that he had ongoing employment. If that evidence were to be believed, it would follow that so understanding the arrangement, Mr Roger was content to have the contract require the giving of six months' notice, after two years' employment. He sought no different term, when the contract was extended only for a year, in circumstances where it was obvious that the business was in difficulty and ongoing employment would not be offered, if there was no turnaround.

173 In the circumstances of this case, I am entirely unable to see how a finding that the contract was unfair, in failing to make express provision for a further six months' notice, is justly available, when Mr Roger had, in effect, twelve months' notice in October 2002, that the employment would come to an end, unless a further period of employment was offered and accepted in the meantime.

Orders

174 For the reasons given, I find the contract unfair, as that term is defined in s 105 of the Act and make the following orders:

1. The contract is varied to provide that Mr Roger shall be allocated 75,000 shares after completion of the first year of employment.

2. The respondent is ordered to pay Mr Roger a sum calculated by reference to the value of those shares, as at the date of this judgment.

175 The parties have liberty to approach further, in relation to the question of the money order, if they are unable to agree on its calculation and in relation to costs.

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LAST UPDATED: 16/03/2006