Federal Court of Australia Joseph v Parnell Corporate Services Pty Ltd [2021] FCAFC 67 Appeal from: Joseph v Parnell Corporate Services Pty Ltd [2020] FCA 426; Joseph v Parnell Corporate Services Pty Ltd (No 2) [2020] FCA 838 File number: NSD 764 of 2020 Judgment of: LOGAN, KATZMANN AND SNADEN JJ Date of judgment: 11 May 2021 Catchwords: INDUSTRIAL LAW – appeal and cross-appeal – claims arising from non-payment of employment entitlements – cross-claim arising from damage caused by breaches of employment obligations – secondment of employee to related foreign corporation – whether claims for unpaid entitlements inure as against Australian employer or foreign second employer – whether non-payment of certain entitlements contravened Fair Work Act 2009 (Cth) – whether primary judge erred in failing to make findings concerning alleged contraventions – whether primary judge erred by not imposing civil penalties for alleged contraventions – where limited power in proceedings in relation to a matter arising under the Fair Work Act to order that costs incurred by one party be paid by another, whether primary judge erred in awarding costs to respondents – whether cross-claim was a proceeding in relation to a matter arising under the Act – whether primary judge erred in calculating entitlement to long service leave – whether primary judge erred in finding that two payments made in settlement of third-party litigation were reasonably recoverable as damages for breach of employee's duties – whether a third such payment ought also to have been recoverable – whether circumstances warranted a single, net judgment CONTRACT – termination of employment for misconduct – settlement of proceedings instituted by third parties in consequence of employee's misconduct – whether settlement amount reasonably recoverable from employee as damages Words & phrases "proceedings … in relation to a matter arising under this Act" Legislation: Conciliation and Arbitration Act 1904 (Cth) 197A Corporations Act 2001 (Cth) ss 180, 181, 182 Fair Work Act 2009 (Cth) ss 44, 90, 324, 545, 570 Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) s 4(2) Workplace Relations Act 1996 (Cth) s 824 Employees Liability Act 1991 (NSW) s 3 Long Service Leave Act 1955 (NSW) ss 4, 5 Federal Court Rules 2011 (Cth) rr 15.01, 39.05, 39.06 Cases cited: ACE Insurance Limited v Trifunovski (No 3) [2012] FCA 975 Aurel Forras Pty Ltd v Graham Karp Developments Pty Ltd [1975] VR 202 Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v ALS Industrial Australia Pty Ltd (No 2) (2015) 235 FCR 366 Banco de Portugal v Waterlow & Sons Ltd [1932] AC 452 Betfair Pty Limited v Racing New South Wales (2010) 189 FCR 356 BNP Paribas v Pacific Carriers Limited [2005] NSWCA 72 Burns v MAN Automotive (Aust) Pty Ltd (1986) 161 CLR 653 Currie v Dempsey (1967) 69 SR (NSW) 116 DJL v Central Authority (2000) 201 CLR 226 Energy Australia Yallourn Pty Ltd v Automotive, Food, Metal, Engineering, Printing and Kindred Industries Union (2018) 264 FCR 342 Fountain v Alexander (1982) 150 CLR 615 Gould and Birbeck and Bacon v Mount Oxide Mines Ltd (in Liquidation) (1916) 22 CLR 490 Gray v Sirtex Medical Limited (2011) 193 FCR 1 Grundy v Lewis (1995) 62 FCR 567 Hawes v Dean [2014] NSWCA 380 Henville v Walker (2001) 206 CLR 459 Hill v Ziymack (1908) 7 CLR 352 House v R (1936) 55 CLR 499 HP Mercantile Pty Ltd v Dierickx (2013) 306 ALR 53 Hunt & Hunt v Mitchell Morgan Pty Ltd (2013) 247 CLR 613 IW v City of Perth (1977) 191 CLR 1 March v Stramare (E&MH) Pty Ltd (1991) 171 CLR 506 McDonald v Parnell Laboratories (Aust) (No 2) (2007) 164 FCR 591 Melbourne Stadiums Ltd v Sautner (2015) 229 FCR 221 Miller v Director of Public Prosecutions (No 2) [2004] NSWCA 249 O'Grady v Northern Queensland Co. Ltd (1990) 169 CLR 356 Parsons v Martin (1984) 5 FCR 235 Protec Pacific Pty Ltd v Steuler Services GmbH & Co KG [2014] VSCA 33 Re McJannett; Ex parte Australian Workers' Union of Employees, Queensland (No 2) (1997) 189 CLR 654 Reg Glass Pty Ltd v Rivers Locking Systems Pty Ltd (1968) 120 CLR 516 Stanley v Service to Youth Council Inc (No 3) (2014) 225 FCR 357 Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd (1998) 192 CLR 603 Winterfield v Bradnum (1893) 3 QBD 324 Rory Derham, Derham on The Law of Set-Off (Oxford University Press, 4th ed, 2010) Division: Fair Work Division Registry: New South Wales National Practice Area: Employment and Industrial Relations Number of paragraphs: 223 Date of hearing: 19–20 November 2020 Counsel for the Appellant: Mr A Britt Solicitor for the Appellant: Harmers Workplace Lawyers Counsel for the Respondents: Mr D Barnett with Mr D Allen Solicitor for the Respondents: Atanaskovic Hartnell Table of Corrections 11 February 2022 At paragraph [70], the reference to paragraph "[18]" has been replaced with "[180]". 11 February 2022 At paragraph [106], the closed quote mark in the fourth sentence has been removed. ORDERS NSD 764 of 2020 BETWEEN: ROBERT JOSEPH Appellant AND: PARNELL CORPORATE SERVICES PTY LTD (ACN 138 251 617) First Respondent PARNELL PHARMACEUTICALS HOLDINGS LTD (ACN 137 904 413) Second Respondent PARNELL CORPORATE SERVICES U.S. INC. (and another named in the Schedule) Third Respondent AND BETWEEN: PARNELL CORPORATE SERVICES PTY LTD (ACN 138 251 617) (and others named in the Schedule) First Cross-Appellant AND: ROBERT JOSEPH Cross-Respondent order made by: LOGAN, KATZMANN AND SNADEN JJ DATE OF ORDER: 11 May 2021 THE COURT ORDERS THAT: 1. The appeal be allowed in part. 2. The cross-appeal be allowed. 3. The orders of the Court made on 17 June 2020 be set aside and replaced by the following orders: (1) Judgment for the respondents/cross-claimants in the amount of USD930,123.50 inclusive of pre-judgment interest. (2) The appellant/cross-respondent pay interest on the judgment sum as is from time to time unpaid at the rate fixed by r 39.06 of the Federal Court Rules 2011 (Cth) pursuant to s 52 of the Federal Court of Australia Act 1976 (Cth). (3) There be no order as to costs. 4. As to the costs of the appeal and cross-appeal: (1) by no later than 4:00 pm on 25 May 2021, any party seeking costs (the costs applicant) file and serve a submission (not exceeding three pages) in support of any such application; (2) by no later than 4:00 pm on 1 June 2021, any party opposing such an application file and serve a submission (not exceeding three pages); (3) by no later than 4.00 pm on 8 June 2021, the costs applicant file any submission in reply (not exceeding three pages) and (4) in the event that no application is made by the time stipulated in order 4(1), there be no order as to costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT THE COURT: Introduction 1 Robert Joseph was a senior executive who was summarily dismissed from his employment on 18 December 2017. At the time of his dismissal he was employed by Parnell Corporate Services Pty Ltd, an Australian company, but was working in the United States of America on secondment to a related American company, Parnell Corporate Services US, Inc. His terms and conditions of employment were governed by separate contracts with the two companies and, insofar as the Australian company was concerned, the Fair Work Act 2009 (Cth) (FW Act). In this judgment we shall refer to the Australian company as Parnell AU and the American company as Parnell US. 2 Mr Joseph sued both Parnell AU and Parnell US alleging that the two companies had wrongfully terminated the contracts, that his position had in fact been made redundant, that he had not been paid his accrued annual leave entitlements under the FW Act, that he had not been paid his contractual entitlement to long service leave, and that Parnell AU had contravened the FW Act in several respects In addition, he claimed that Parnell US was in breach of the secondment contract by failing to pay relocation costs and not reimbursing him for the costs of attending a deposition in the United States in relation to proceedings brought against Parnell US. He further claimed that Parnell US was required to indemnify him against legal costs he had incurred in connection with the termination of his employment. 3 Mr Joseph also sued the parent company, Parnell Pharmaceuticals Holdings Ltd (Parnell Holdings), as well as Alan Bell, its Executive Chairman. Dr Bell was said to be knowingly concerned in the contraventions by Parnell AU of the FW Act. 4 Mr Joseph sought a variety of relief including declarations, damages and/or compensation, and civil penalties for the alleged contraventions of the FW Act. 5 The corporate respondents filed a cross-claim by which they alleged that Mr Joseph had acted in breach of various contractual and other duties that he owed. They sought damages in the form of reimbursement of sums paid in settlement of litigation that two former Parnell employees brought in the United States (the US litigation) and orders setting off any such damages against any amount the Court might award to Mr Joseph. 6 The primary judge concluded that Mr Joseph had engaged in serious misconduct and the termination of his employment was lawful. Those findings implicitly disposed of the allegation that his position had been made redundant and that he was therefore entitled to receive redundancy pay. His Honour noted that the respondents accepted that, subject to any entitlement they might have to a set off, as sought in the cross-claim, Mr Joseph should have received his entitlements to annual leave and long service leave. On the cross-claim his Honour found that Mr Joseph's conduct "occasioned" the institution of the US litigation, that that conduct constituted a breach of his contract of employment, and that some or all of the money paid to settle those proceedings was recoverable as damages in this proceeding. His Honour declined to make an order for set-off. See Joseph v Parnell Corporate Services Pty Ltd [2020] FCA 426 (primary judgment). 7 At the time the judgment was published his Honour ordered the parties to bring in short minutes of orders to give effect to his reasons. The parties agreed on all orders except those relating to the quantification of the long service leave entitlement. In a second judgment his Honour resolved that dispute by finding, in the respondents' favour, that judgment should be entered for the amount the respondents agreed should be paid on the basis that Mr Joseph had not proved he was entitled to any more: Joseph v Parnell Corporate Services Pty Ltd (No 2) [2020] FCA 838 (second judgment). 8 His Honour ordered that judgment be entered in Mr Joseph's favour in the amount of USD141,559.90 inclusive of pre-judgment interest and ordered Parnell US to pay post-judgment interest on any unpaid amount at the rate fixed by r 39.06 of the Federal Court Rules 2011 (Cth) (Rules). His Honour entered judgment for the respondents on the cross-claim in the amount of USD1,004,689.54, inclusive of pre-judgment interest, and made a similar order for post-judgment interest. He ordered Mr Joseph to pay the respondents' costs as agreed or taxed. The relevant facts 9 As mentioned above, Mr Joseph was employed under contracts of employment with both Parnell AU and Parnell US. The Australian contract, dated 1 February 2011, appointed him director and Chief Executive Officer of 11 companies in the Parnell group, including Parnell AU and Parnell Holdings, on a base annual salary of AUD500,000. One of the terms of that contract was that he agree to accept such offices in the Parnell group, or related companies in the Parnell group as from time to time may reasonably be required. 10 The US contract was made in February 2012. It appointed Mr Joseph director and Chief Executive Officer of the same companies listed in the Australian contract with the addition of three US companies including Parnell US. It replicated many, but not all, of the terms of the Australian contract. Pursuant to that contract Mr Joseph was seconded to work in Kansas City, Missouri from 1 February 2012 "until termination". 11 On 14 October 2017, a meeting was held of directors of Parnell Holdings in which a resolution was passed that Mr Joseph's employment be terminated and he be relieved of his position as director of all the company's subsidiaries. The same day, Dr Bell wrote to Mr Joseph notifying him that his employment was terminated pursuant to cl 18.1 of both the Australian contract and the US contract, giving him six months' notice as provided for in that clause and requiring him to work through his notice period. 12 On 18 December 2017, Dr Bell wrote again to Mr Joseph on behalf of Parnell AU and Parnell US summarily dismissing him. The relevant parts of the letter were set out in the primary judgment at [22]–[23]. The letter began: Immediate termination of your employment 1. We refer to your employment by Parnell Corporate Services Pty Ltd (Parnell CS) [Parnell AU] pursuant to the written contract of employment dated 1 February 2011 (your Contract) and to your secondment to Parnell Corporate Services U.S. (Parnell CS US) [Parnell US] pursuant to the written agreement between you and Parnell CS US effective from 1 February 2012 (your US Contract). 2. This letter constitutes immediate notice of the termination of your employment pursuant to clause 18.3 of your Contract and your US Contract, on the basis that your conduct described in this letter constituted: a. acts that may detrimentally affect the Parnell group companies; and b. wilful and material breaches of your Contract and your US Contract. 3. This notice supersedes the notice of termination given to you on 14 October 2017 pursuant to clause 18.1 of your Contract and your US Contract. Your employment by Parnell CS and Parnell CS US ends effective immediately upon the giving of this notice. 13 Amongst many other things, the letter went on to refer to allegations made about Mr Joseph's conduct which was the subject of the US litigation and Mr Joseph's conduct in relation to some of that litigation. It also alleged that in a notice to shareholders Mr Joseph had disclosed confidential information and made a number of assertions which were false and misleading, imputed improper motives to Dr Bell and another director, were disparaging of the Board and "Parnell", and were likely to cause significant detriment to "Parnell". We take the references to "Parnell" to be references to the companies in the Parnell group. 14 The US proceedings were brought by two senior employees of Parnell US: Jennifer Lindsey and Jennifer Tymeson. Ms Lindsey was Vice-President of Global Marketing. Ms Tymeson occupied the position of Director of Marketing, Companion. The reference to "Companion" is a reference to a division within the operations of Parnell US focused on the treatment of companion animals. In order to understand the nature of those proceedings, it is necessary to trace some of the relevant history. 15 Ms Lindsey had been working for Parnell US for less than six months when, in December 2015, she attended Mr Joseph's office with her elderly and arthritic dog, Yogi. As had been arranged, Mr Joseph injected the dog with a drug manufactured by Parnell. After doing so (and without warning), he injected Ms Lindsey with the same syringe he had used to inject her dog. 16 In late January 2016, Parnell held its annual conference in Hawaii. On 28 January 2016, at a "gala dinner", attended by over 100 employees, Mr Joseph appeared on stage with the Chief Financial Officer and told the following lewd "joke": Jen Lindsey was walking her dog, Jen Tymeson, in the dog park. They came upon Jeremie Tessier who took some dog bones and organised them in a straight line. Jen Tymeson then took those dog bones and built a beautiful Eiffel Tower. Jen and Jen came upon Casey Mize, who gobbled up all the dog bones, and fucked Jen Tymeson and then fucked Jeremy Tessier. 17 Many employees were offended. Ms Tymeson was very upset and complained. Mr Joseph apologised to both Ms Lindsey and Ms Tymeson. Both later instructed lawyers. 18 The day after the gala dinner, Mr Joseph issued a written apology to all staff for his "inappropriate" behaviour, acknowledging that "many many people" considered the "joke" to be "extremely inappropriate and insensitive" and that he had caused "an enormous amount of offence" to everyone in attendance at the dinner. 19 On 2 February 2016, Mr Joseph spoke to Nathan Orr, an American attorney, about the prospect of Ms Tymeson bringing legal proceedings. 20 On 3 February 2016, an anonymous email was sent by a "concerned employee" to Dr Bell and Parnell's independent directors entitled "Concerned for Parnell's success". The letter included the following complaints: In order for Parnell to achieve the goals that will make the vision of the company a reality, it is imperative that this is a positive, passionate, hard-working, and comfortable place to be and work for everyone. The events that are described below have already significantly impacted many employees, and the potential negative implications of these events on the viability and success of Parnell are immeasurable. You may already be aware of these events. In the event that you are not, please review below and act upon as you see fit. • On Wednesday evening (January 27, 2016) at the Gala event, Robert Joseph (CEO) did open the evening with an undeniably explicit and very offensive "joke" that named specific Parnell employees. It was crude, derogatory in nature, and shocking. • On one evening during the meeting Robert Joseph (CEO) did assault (there is no other word-he impulsively jabbed a needle into individuals) employees with syringe that is meant to deliver medication. The victims of the assault were "stabbed" in succession, with the same needle. There is photographic evidence of the results of this (bruising). Not only are future internal Parnell organizational events of concern, but planned customer events for this year cannot be jeopardized with the risk of such behaviors being repeated. Morale at Parnell has been significantly impacted by the events of last week and that is not acceptable. Delivering this message in an anonymous fashion is not optimal. However, it is most prudent. 21 The following day Dr Bell and Mr Joseph had a telephone conversation about the subject-matter of the anonymous email in which Mr Joseph was asked about the stabbing allegation and in which he denied ever stabbing or injecting anyone. 22 On 5 February 2016, Mr Joseph emailed Mr Orr about the allegations in the anonymous email which he attributed to Ms Tymeson "directly or indirectly". Later that day, after discussions with Ms Tymeson's attorney, Mr Orr emailed Mr Joseph and Erika Vikor (Parnell US's Vice President of Commercial Development and Human Resources) informing them that Ms Tymeson had agreed to abandon any claims against the company and had decided to return to work. Mr Joseph replied: Not a good outcome, we need to work out a way for her to move out of the company. This issue has raised some very significant concerns as to her integrity and motivations which goes all the way to the Board and relates also to her failings professionally last year. Can we talk today. 23 In the ensuing conversation, Mr Joseph explored with Mr Orr the possibility of offering Ms Tymeson a redundancy. 24 On 10 February 2016, Ms Tymeson's employment was terminated. She received a letter notifying her that Parnell US had decided to eliminate her position effective immediately and offering her a severance package or, if she did not accept the offer, four weeks' pay. She was informed that the decision to eliminate her position had been made "deliberately" and "over a period of several months" and that Parnell could provide "ample evidence and documentation" to demonstrate that the plan had been in place "for some time". 25 The same day, Mr Joseph had a conversation with Mr Orr in which he asked him: "What is the risk of her saying that the termination is in retaliation for her complaint?" 26 Precisely one week later, on 17 February 2016, Ms Tymeson filed with the US Equal Employment Opportunity Commission a Charge of Discrimination against Parnell US and Mr Joseph. By it, she complained that she was discriminated against on the basis of her sex when she was dismissed from her employment, that the environment in which she had worked was "sexually hostile", that nothing was done to address that environment despite complaints she had made about it, and that she was dismissed as a result of her complaints. 27 On 21 March 2016, Ms Lindsey resigned. Her resignation letter was in the following terms: As a result of your recent assault with a syringe and your pattern of engaging in, and encouraging, crude and offensive sexual harassment, I am formally submitting my notice of resignation. I can no longer compromise my personal values and continue to work for Parnell. Be advised, that I will also immediately call the police if you make any additional effort to assault me with a syringe or any other object. My resignation is prompted by repeated instances of grossly inappropriate, sexually offensive behavior by you, the CEO of Parnell, and your assault on me with a used syringe. For no reason and without warning you stabbed me in the left thigh with a used hypodermic syringe after you injected my dog with the same syringe contaminated with the experimental drug, Zydax. This criminal behavior was both shocking and frightening. Furthermore, as we are all aware, I am not the only employee of this company that you have stabbed with a syringe. These assaults have been witnessed by members of upper level management and ignored, rather than prosecuted to the fullest extent of the law. Your conduct is not only criminal, but sadistic and deranged. I can no longer be a part of a company that tolerates and fosters sadistic and sexually inappropriate behavior without consequences. The environment at Parnell is negative, hostile, and sexually harassing to females. No reasonable person would, or should, be required to accept working on a daily basis under the condition that they must accept the very real risk of being assaulted and confronted with psychotic behavior from the Chief Executive Officer, and accept that they will have to endure offensive sexual behavior, videos, and comments. It has become clear that those are the conditions you, and the company, require me to accept and that these conditions are not going to change despite my complaints. For these reasons, I have no choice but to resign. As context, you will recall that multiple acts of assault and sexual harassment occurred at the all-company conference in Hawaii. Following that conference, I had expected, based on our discussions, several discussions you had with other ELT members, and your email apology to the entire company, that changes would be made. I had further expected that you were going to be punished in some fashion and that management would institute changes and prompt remedial action. Your email apology to the entire company promised "to show tangible and material change and to take steps to ensure that nobody in this company thinks it is ok to offend their colleagues. I (you) will be thinking hard over the coming days as to the actions I (you) need to take to uphold our values and to represent you all as your CEO." Rather than complying with your promises, within a week of your email, in conversation with me, you became steadfast in keeping Parnell a "polarizing culture" and would not engage in conversation about change or course correction. You used the paradigm of Parnell as an excuse for bad behavior and justification to offend, bully, assault and sexually harass. This was again personally offensive to me as I told you face to face, as well as through text communication, that your behavior was wrong, offensive to all employees, and in general, not fitting for a CEO of a business. You attacked your employees with used syringes. You are dangerous and appear to embrace and promote a culture designed to intimidate and humiliate females. Assaulting me with a used syringe is really beyond the boundaries of civilized behavior. Furthermore, in my professional career I have never encountered a company where the CEO and other top level managers engaged in the production of pornographic videos as a means of humiliating and embarrassing females at the annual meetings. When the head of Human Resources is creating and presenting to employees a video simulating oral sex, it is clear things are not going to change. It is impossible for me to continue to work with you as I truly fear for my physical safety. I am saddened that your behavior is approved of by the Board and members of upper level management. After I complained of the offensive behavior, you told me in no uncertain terms that I could accept the way things were or leave. Therefore in order to avoid further assaults and disgusting, crude sexual harassment, I am left with no choice but to hereby tender my resignation. Although I am concerned that I will be retaliated against if I stay, I am willing to provide my six weeks' notice. Should you approach me, or any other employee with a syringe or any other object to be used to do physical harm, I will immediately call the police. I also must insist that you refrain from making sexual jokes, videos or advances while I am in the work place. Any act to withhold salary, bonuses or other benefits during these six weeks would be considered retaliatory. While I am in the workplace I would ask that you stay away from me. 28 On 13 April 2016, Ms Lindsey filed a Charge of Discrimination in the US Equal Opportunity Commission in which the details of the matters raised in her letter of resignation were fleshed out. The next day, she filed a petition against Mr Joseph in the Circuit Court of Jackson County, Missouri, by which she alleged that Mr Joseph had "engaged in a pattern and practice of offensive and dangerous physical assaults toward [her] and others". By that proceeding (Lindsey assault proceeding), she sought both compensatory and punitive damages against Mr Joseph. 29 On 19 April 2016, Ms Tymeson also filed a petition in the Circuit Court of Jackson County, Missouri (Tymeson proceeding). The Tymeson proceeding arose from the discrimination charge Ms Tymeson had earlier filed with the US Equal Employment Opportunity Commission referred to above at [26]. We interpolate that the earlier process appears to have been a formal precursor to the action that was commenced on 19 April 2016 although, for present purposes, nothing turns on that. 30 Ms Tymeson sued both Parnell US and Mr Joseph. Amongst other things, Ms Tymeson alleged that she was the victim of sexual discrimination in that she had been sexually harassed by Mr Joseph and that there was a failure "to make good faith efforts to establish and enforce policies to prevent unlawful discrimination against [the company's] employees". She claimed that Parnell US had retaliated against her for making complaints about the discrimination by terminating her employment. She also alleged that Mr Joseph was liable to her for negligent infliction of emotional distress as outlined in her Charge of Discrimination. She sought damages (both compensatory and punitive) for retaliatory action by the company and for negligent infliction of emotional distress by Mr Joseph. She requested a trial by jury on all causes of action. 31 On 12 January 2017, Ms Lindsey filed a complaint in the US District Court (District of Kansas) against Parnell US and two other Parnell companies. On 4 December 2017 (not 12 April, the date recorded in the principal judgment), that complaint was amended. The case (Lindsey discrimination proceeding) was described in the amended complaint as one "about Parnell's sexually-charged culture of gender discrimination and pervasive sexual harassment and its pattern and practice of creating a pervasive sexual and hostile working environment for women (like [Ms Lindsey]) and the retaliating against women (like [Ms Lindsey]) who oppose the discriminatory and sexually-charged environment that demeans women and encourages sexual behaviour and lowering the inhibitions of female employees". Some of the conduct the subject of the complaint was allegedly committed by Mr Joseph in the course of his employment. That conduct included the incident in which she was injected with a used syringe (see [15] above, hereafter the "stabbing incident"), the behaviour at the conference in Hawaii (above, [16]-[18], hereafter the "gala dinner incident"), and numerous other matters, which were described in some detail. It also captured the circumstances of the termination of Ms Tymeson's employment. 32 On 1 November 2017, Ms Tymeson's lawyers served a notice requiring Mr Joseph to attend their offices on 20 November 2017 to give a deposition in her case. On 16 November 2017, acting on Mr Joseph's instructions, Parnell's lawyers moved the Missouri Circuit Court for an immediate protective order to prevent Mr Joseph's deposition from proceeding. On 29 November 2017, Ms Tymeson's lawyers filed a motion for sanctions alleging that he had misled the court. 33 All three proceedings were referred to mediation. The mediation concerning the two proceedings commenced by Ms Lindsey took place on 16 May 2017. The mediator, Jay Daugherty, was a former Missouri Circuit Court judge. At the conclusion of the formal mediation session, the two proceedings remained unresolved; but the mediator later circulated a document incorporating a "mediator proposed settlement" proposal, which all sides ultimately accepted. Parnell US paid Ms Lindsey a total of USD295,000 in settlement of her two proceedings: USD225,000 for the Lindsey assault proceeding and USD70,000 for the Lindsey discrimination proceeding. It is necessary to explore in some detail the circumstances that led to those settlements. 34 On 5 December 2017, Parnell US received advice from its attorneys, Shook, Hardy and Bacon, concerning all three proceedings (5 December 2017 letter). Shook, Hardy and Bacon also represented Mr Joseph in what that letter described as a "joint representation arrangement". The (or a) purpose of the 5 December 2017 letter was to outline the nature of the proceedings that Ms Lindsey and Ms Tymeson had commenced, to identify procedural steps in each which in due course Parnell US and Mr Joseph would need to take, and to summarise the potential exposure to financial liability that each presented. 35 Insofar as the Tymeson proceeding was concerned, the 5 December 2017 letter identified the "[e]stimated exposure" as follows: Estimated exposure: Tymeson may be able to recover back pay and front pay, but those amounts are not known at this point, as we have not yet conducted discovery into her post-Parnell employment circumstances. As to compensatory damages to account for claimed emotional harm, we estimate she may be able to recover in the range of $50,000 to $150,000. This case also has the potential for a meaningful award of punitive damages, but the range would best be gauged through a jury research or focus group exercise. Lastly, if Tymeson prevails at trial, her counsel will be able to recover their attorney's fees (likely in the $250,000 to $300,000 range). It also estimated that "[a]nticipated defense expense through trial" would be "$225,000 to $275,000". 36 The letter offered equivalent estimates in respect of the two Lindsey proceedings. As to the Lindsey discrimination proceeding, it summarised the exposure of Parnell US as follows: Estimated exposure: We believe Lindsey quickly secured employment following her resignation from Parnell, so her lost wage damages are likely to be modest (perhaps less than $25,000), though she does have other claims relating to monies allegedly owed under her employment agreement that could bring actual damages more in the range of $75,000. Between compensatory and punitive damages potential, we believe there will be a statutory cap at $50,000. As to attorney's fees, Lindsey's attorneys will be able to recover them if she prevails at trial. They are likely to be in the $250,000 to $300,000 range. The "[a]nticipated expense through trial" was said to range from "$175,000 to $225,000". 37 As to Mr Joseph's "[e]stimated exposure" in the Lindsey assault proceeding, the 5 December 2017 letter recorded: Estimated exposure: We believe Lindsey has very little in actual medical expense relating to the alleged incident, but perhaps may be awarded as much as $100,000 in emotional distress type damages. There is potential for a meaningful punitive damages award as well, if a jury were to find Lindsey sympathetic and believe Rob Joseph acted recklessly. We can better gauge this potential through conducting a jury research exercise. The potential for punitive damages will vary significantly depending upon the actual makeup of the jury hearing the case. The "[a]nticipated expense through trial" for that matter was said to be "$150,000 to $200,000". 38 Nearly two weeks later, Mr Joseph's employment was summarily terminated. The proceedings that Ms Tymeson and Ms Lindsey had commenced against him and Parnell US continued. Shook, Hardy and Bacon continued to act in them for both Parnell US and Mr Joseph. 39 On 14 February 2018, one of that firm's employment litigation partners, William Martucci, sent an email to his clients about the two Lindsey proceedings. Attached thereto was an email that he had received earlier that day from Mr Daugherty containing the "mediator proposed settlement" terms upon which (or upon a close analogue of which) both of those proceedings would ultimately be resolved. It is convenient to set out in full the terms of Mr Martucci's email: For your consideration, attached is an insightful update from the mediator concerning the Lindsey litigation resolution effort. This path for resolution merits serious consideration. It is our best pathway for resolution at this point in time, and would call this Lindsey litigation to close. 40 It is also convenient to set out in full the email of the same date from Mr Daugherty. It is not clear why he was prompted to send it some nine months after the initial mediation session but nothing turns on that. His email read as follows: Thank you again for the opportunity of mediating this most interesting case. Each of you have done an outstanding job for your clients in this difficult lawsuit. Unfortunately, the matter did not settle at the mediation (Plaintiff at $478,000 and Defendant at $125,000), but post mediation discussions with counsel give me some hope that a Mediator Proposal might have a reasonable chance of being helpful. I think with significant uncertainty on the horizon and a trial upcoming in the Fall of 2018 that further incremental negotiation is not as productive at this point in time. However, I believe we still have an excellent opportunity to get this case resolved. Of course, in preparation for the mediation and now in preparation for this mediator proposal, I spent considerable time evaluating the legal and factual positions of all the parties and considered the merits of both sides. As a Circuit Judge for over 20 years, I certainly understand how firm both sides can be in their respective positions, but to not get this case settled at this stage where the risk is so great would be unfortunate. Therefore, I am proposing a mediator proposed settlement which represents my effort to evaluate the case having considered your respective legal and factual positions. This mediator proposal is listed below. It is presented to both sides in the spirit of compromise and in an effort to finally resolve this case. Please remember when it comes to litigation that certainty is valuable, finality is valuable and I hope you will strongly consider the proposal listed below as a rational way to resolve this dispute short of the uncertainty inherent in litigation and appeals. Therefore, in order to resolve this case, I propose the following settlement with these terms: 1. Defendant to pay to the Plaintiff $295,000, payable within 20 days of the signing of the formal settlement agreement and releases. Of the amount paid to the Plaintiff $225,000 will be allocated to the Missouri physical personal injury battery case and $70,000 for the Kansas case with only the net paid to the P after attorney fees and expenses being allocated as 60% W-2 and the remainder as emotional damages. 2. Parties agree to provide full mutual general release. 3. Dismissal with prejudice. 4. Defendant to pay the mediation fees. 5. Each side to pay their own court costs and attorney fees. 6. Plaintiff agrees to a nondisparagement clause. 7. Parties agree to a mutual confidentiality clause as to the terms but not as to the fact of the settlement. 8. Counsel will prepare complete settlement documents with normal and usual terms. This blind mediator's proposal will remain open until February 20, 2018, at 4:00 p.m. central time. Each side will notify the mediator by email on or before that date and time as to the acceptance or rejection of this proposal. The other side will not be told of your respective decision unless the result is a settlement. Thank you for your help in this matter. Feel free to call me if you have any questions about the proposal or any other related matter. (Emphasis added.) 41 On 19 February 2018, Shook, Hardy and Bacon sent a letter to Parnell US and Mr Joseph. They advocated, amongst other things, for "serious consideration of [the] mediator's proposal" and expressed the view that the "joint interests" of Mr Joseph's and Parnell US were "best served by resolution at this time [through] acceptance by the parties of the mediator's proposal". They also made a number of significant observations: Among the considerations that support this evaluation are finality, efficiency, expense, and respect for the mediator's experience and insights. As we have discussed on previous occasions, the mediator is concerned with resolution from a pragmatic, economic standpoint, as well as a sense of the direction and strength of the overall litigation. This sense of the direction and strength of the litigation often does not take into account the possibility of persuasive elements in a given case, such as credibility determinations and a full understanding of the factual context. In other words, we may have a view very different from the mediator in terms of the actual ability to outright win a case, but the mediator is focused, as we noted, on more pragmatic resolution considerations. On balance, for a variety of reasons, we recommend resolving the Lindsey litigation at this point along the lines of the mediator's proposal. We wish to be very express about the understanding that we are only involved in the Lindsey litigation itself and advising on it. There may be other matters of disagreement that each of you have with each other that may have some impact on this matter, but we are not knowledgeable on those aspects and are not advising on them. Those are matters that are best evaluated by your individual counsel and cannot be effectively evaluated by us as your joint counsel in consideration of your joint interests. Our joint representation is focused on the Lindsey litigation and the resolution of it in a manner that we believe is most favorable to your joint interests. … …We are of the opinion that this resolution is favorable when one considers the overall Lindsey litigation expense and the advantage of finality. (Original emphasis.) 42 It will be recalled that Parnell US had only recently summarily dismissed Mr Joseph. As the emphasised extracts suggest, the lawyers were apparently concerned that the interests of Parnell US and Mr Joseph might no longer be sufficiently aligned to permit their joint representation. Those concerns found expression later on in the correspondence: If you do not wish to proceed with the mediator's proposal for resolution, then it is likely that your interests are not aligned for this purpose. In that regard, we note that Alan and Brad [the representatives of the corporate client, Parnell US] are in favor of accepting mediator Daugherty's proposal to resolve the Lindsey litigation. We realise at this point that Rob [Mr Joseph] has expressed reservations about this approach. 43 On 22 February 2018, Shook, Hardy and Bacon acted on those concerns and withdrew its "joint representation" of Parnell US and Mr Joseph. That withdrawal notwithstanding, the firm corresponded further with its then former clients on 24 February 2018. That letter recorded that it had been sent at Mr Joseph's request and appears to have followed from a discussion the previous day between Mr Joseph and representatives of the firm. Of present significance are the following two paragraphs: The purpose of this letter is to assist in the transition with respect to the representation of Parnell and Rob by new counsel in the Lindsey litigation. Of course, in the transition, we have endeavoured to ensure that your respective interests are well represented. We thought Rob's suggestion of his approach to resolution was very helpful for all to know in this context. Rob notes that he, in his initial responses, did not say that he was opposed to settlement, but rather that he needed to look into certain aspects of it. It is encouraging that Parnell wishes to resolve this case consistent with the mediator's proposal, and it is encouraging that Rob now wants all to know that he wishes to resolve this case consistent with the mediator's proposal. Again, we thank the three of you for the opportunity to work with you on behalf of Parnell and on behalf of Rob. Rob made this special request to us, and we thought it was appropriate to make this communication to you. We realize we are not effectively your counsel in the Lindsey litigation at this time, but if this letter facilitates communication, we think it is worthwhile. (Emphasis added.) 44 Presumably with the assistance of new representation, Parnell US executed settlement terms with Ms Lindsey to resolve the two proceedings she had instituted. Those terms, which Ms Lindsey signed on 11 April 2018, were consistent with the terms that Mr Daugherty had proposed. 45 Later in 2018, a similar process ensued with respect to the Tymeson proceeding. It, too, was the subject of mediation, again before Mr Daugherty. It, too, did not initially resolve at the mediation session. As he had done in relation to the two Lindsey proceedings, Mr Daugherty circulated a "blind mediator's proposal" for settling the Tymeson proceeding. That proposal was contained in an email he sent to the parties' representatives, in the following terms: Thank you again for the opportunity of mediating this most interesting case. All of you have done an outstanding job for your clients in this difficult lawsuit. Unfortunately, the matter did not settle through conventional incremental negotiations (Plaintiff at $260,000 and Defendants at $140,000), but I think with extensive discovery and depositions continuing and a trial in the future, that further incremental negotiation is not as productive at this point in time. However, I believe we still have an excellent opportunity to get this case resolved at this stage. As a Circuit Judge for over 20 years and a mediator for 7 years, I certainly understand how firm both sides can be in their respective positions, but to not get this case settled at this stage where the risk is so great would be unfortunate. Of course, in preparation for the mediation, and now in preparation for this mediator proposal, not to mention conducting the mediation itself, I spent considerable time evaluating the legal and factual positions of all the parties and considered the evidence likely to be presented at trial. Taking those experiences into account, I am proposing a mediator number which represents my effort to evaluate the case having considered the likely evidence, the risks to both sides and your respective legal positions. This mediator proposal is listed below. It is presented to both sides in the spirit of compromise and in an effort to finally resolve this case. Please remember when it comes to litigation that certainty and finality are valuable and I hope you will strongly consider the proposal listed below as a rational way to resolve this dispute short of the uncertainty inherent in a trial. In order to resolve this case, I propose the following settlement with these terms: 1. Defendant Parnell to pay to Plaintiff $180,000 all payable within 15 days after the execution of the releases. Of the net amount paid to the Plaintiff 25% to be W-2 and the rest 1099. A draft agreement to be provided to Plaintiff within one week from November 2, 2018. 2. The Plaintiff to provide a full general release of any and all claims with no admission of liability with Joseph included in addition to Parnell. 3. Dismissal of the lawsuit with prejudice within 5 days of Plaintiff's receipt of payment. 4. Mutual confidentiality as to the fact and terms of the settlement. 5. No reapply, no rehire, neutral reference. 6. Each side to pay their own court costs and attorney fees. 7. The Defendant Parnell to pay the mediation fees. 8. Counsel will prepare complete settlement documents with normal and usual terms. This is a blind mediator's proposal which means the other side will not be told of your respective decision unless the result is a settlement. Counsel shall advise the mediator by email no later than Thursday Nov. 1, 2018, at 8:00 p.m. (U.S. Central time) of its acceptance or rejection of the mediator proposal. Thank you for your help in this matter. Feel free to call me if you have any questions about the proposal or any other related matter. (Emphasis added.) 46 That proposal was the subject of written advice given to Parnell US on 1 November 2018 by its new lawyers, Stinson Leonard Street. Again, it is convenient to set that correspondence out in full: Alan/Brad -you may recall that the Lindsey case did not settle at mediation, but ultimately got resolved after the mediator ("Judge Jay") proposed a mediator's number that both parties accepted. Since the case did not resolve last night, but the parties were much closer, he has done that again. His mediator's proposal is $180,000. I know that is more than you want to pay, but my best judgment is that it is a good settlement in this case. It is far less than you paid Lindsey and properly so, given the facts. Unfortunately, we are in a situation where - as you described it - the lax procedures in Overland Park in the Joseph era have left us with no documentation (other than Rob's after-the-fact letter) to prove that the elimination of Tymeson's position had already been decided by the time she complained of sexual harassment. In Judge Daugherty's opinion, and I agree, this is very problematic for us. Judge Daugherty's candid opinion to me last night was that even with testimony, the jury would think our story that we were already planning to eliminate her position "rings hollow" without any documentation to support it. Plus, former employees (even though we can portray them as disgruntled) will dispute our version of events. As I mentioned on our last call, the most unfortunate aspect of U.S. employment law is that even if the jury or judge awards Tymeson a small amount of money, you will be required to pay her attorneys' fees, which could run as much as $200,000 through trial. I know this is very unfair - but it is the system we have to work with. Hopefully, if you are able to resolve this case, you will have closed a very painful chapter in Overland Park. Judge Jay has given us until 8 p.m. tomorrow (noon on Friday for you) to accept or reject the mediator's proposal. We don't know if she will accept, but based on my conversations with him, I think he has a high degree of confidence that she will. If you'd like to discuss, please let me know. 47 A few weeks later, the Tymeson proceeding was settled on written terms consistent with Mr Daugherty's proposal. Unlike with the two proceedings that Ms Lindsey had commenced, Mr Joseph was not involved in the settlement negotiations that culminated in the compromise of the Tymeson Proceeding. Indeed, by that point in time, he had already filed his originating application in this Court. 48 With that regrettably lengthy historical summary complete, attention can now turn to the present proceedings. The proceedings before the primary judge 49 On 14 June 2018, Mr Joseph filed an originating application and statement of claim alleging, among other things, that the termination of his employment was wrongful, that in fact his job had been made redundant, and that Parnell AU was liable to pay him redundancy pay, payment in lieu of notice, and unpaid entitlements on termination including accrued annual leave and long service leave. He alleged that Parnell AU had contravened the FW Act in multiple respects and that Dr Bell was involved in those contraventions. He also alleged that Parnell US was liable to reimburse him for his costs in relocation to the United States with his family and for all expenses he had incurred in the course of his employment, and to indemnify him for fees he had been charged for legal advice about the validity of the October board meeting. 50 The respondents denied that the termination was wrongful but accepted that Mr Joseph was entitled to his accrued but untaken annual leave and long service leave. In their cross-claim, they alleged that he had breached his duties as CEO and director causing them loss, that loss being the amount they had to pay to settle the US proceedings described above. In addition, they sought an order, whether by way of set-off or judgment in a net sum, that Mr Joseph's entitlement be reflected in a reduced liability to them. Mr Joseph admitted that he owed duties to all three corporate respondents, among other things, to faithfully and diligently perform the duties and exercise the powers consistent with his position as CEO of each of the companies in the Parnell group, and to exercise reasonable care and skill; but he denied that he breached those duties. He submitted, in the alternative, that any liability he might otherwise have to account for those funds was extinguished by cl 27 of Parnell Holdings' constitution, pursuant to which he was indemnified (or largely indemnified) in respect of liabilities incurred in consequence of conduct in which he engaged in his capacity as an executive officer of the Parnell group of companies. 51 A number of people gave evidence. They included Mr Joseph, Ms Vikor, Dr Bell, Mr Orr, and Ms Lindsey. 52 The primary judge found Mr Joseph to be an unreliable witness. In contrast, his Honour found Ms Lindsey to be a witness of truth and characterised Dr Bell as a careful and cooperative witness, accepting his evidence "without reservation". His Honour also accepted the evidence of the respondents' other witnesses where it conflicted with the evidence given by Mr Joseph and his witnesses. The reasons of the primary judge 53 The primary judge rejected the respondents' contention that Mr Joseph's conduct with respect to the US litigation justified his summary dismissal. Nevertheless, his Honour held that the respondents were entitled to summarily terminate his employment for any one of three reasons: his conduct in relation to the notice to shareholders (above at [13]); his conduct in connection with the stabbing incident; and his conduct in connection with the gala dinner incident. Unless otherwise indicated all references below are to the primary judgment. 54 With respect to Mr Joseph's conduct in relation to the notice to shareholders, the primary judge said (at [63], [65]) that there was little doubt that the notice disclosed confidential information and held that the disclosure was contrary to cl 15 of his Australian and US contracts. His Honour held that the disclosure of the information involved a repudiation of essential obligations under the contracts, was destructive of the confidence between employer and employees, and was repugnant to the employment relationship. He found that this conduct alone would be a sufficient basis for concluding that Mr Joseph had engaged in misconduct within the meaning of cl 18.3(a) of the contracts (which entitled the companies to terminate the contracts without notice). He also found (at [72] and [81]) that several statements made in the notice were "false and misleading", that the notice was "disparaging to the Board and to Parnell" as was asserted in the December 2017 termination letter, and that these matters, too, amounted to misconduct within the meaning of cl 18.3(a) of the contracts. 55 In relation to Mr Joseph's conduct towards Ms Lindsey, the primary judge found (at [92]) that in December 2015, suddenly and without warning, Mr Joseph stabbed Ms Lindsey in her upper left thigh, through her jeans, with a needle he had just used to inject the drug, Zydax, into her dog. This was an assault, his Honour said (at [94]–[95]), which, without more, would have justified Mr Joseph's summary dismissal. He described it (at [94]) as, at the very least, "destructive of the confidence as between employer and employee". 56 Turning to Mr Joseph's conduct during the gala dinner incident and its aftermath, the primary judge noted that, in resisting the claims made in the cross-claim, Mr Joseph maintained that Ms Tymeson did not find the "joke" offensive and that her employment had not been terminated. Mr Joseph claimed that her employment had come to an end because her job was redundant owing to the restructure of the marketing team. 57 The primary judge found (at [99]) that Ms Tymeson was shocked and deeply offended at her inclusion by name in Mr Joseph's lewd "joke". His Honour noted that she had subsequently instructed a US attorney who then contacted Mr Orr, who acted for both Mr Joseph and Parnell US (at [103]), and that the lawyers negotiated a return to work for Ms Tymeson. His Honour found that Mr Joseph resisted, if not opposed, her return to work, misled Mr Orr about the truth of certain matters pertaining to her employment, and drafted a letter (the termination letter) to Ms Tymeson containing factual inaccuracies (primary judgment at [105]-[112]). In particular, his Honour found that the termination letter contained the false statement that over a period of several months a decision had been taken to "terminate [her] position" when no such decision had been made (at [113], [117]). 58 The primary judge held that the combination of these matters also justified Mr Joseph's summary dismissal (at [123]). The primary judge further held (also at [123]) that, in combination, the comments made at the gala dinner; resisting if not opposing Ms Tymeson's return to work as negotiated by the lawyers; misleading Mr Orr; and drafting the letter to Ms Tymeson containing the false representation concerning the decision to terminate her employment amounted to serious misconduct and justified Mr Joseph's summary dismissal. 59 Turning to the claims under the FW Act, the primary judge first noted the respondents' acknowledgment that Mr Joseph should have received payments on termination including his annual leave and long service leave entitlements and, subject to the question of whether the amount of those entitlements should be set off against any damages they might be awarded on the cross-claim, he should have been paid them (at [127]). 60 The primary judge then said (at [128]) that "the circumstances are such that" in the event that a contravention of the FW Act had been made out and, in particular a contravention of s 90 (which includes a requirement that at the end of an employee's employment an employer pay an employee who has a period of untaken paid annual leave the amount that would have been payable if the employee had taken that period of leave), "at best" Mr Joseph would be entitled to declaratory relief but no penalty. His Honour did not go on to determine whether there was in fact any contravention of the FW Act, apparently considering it unnecessary to do so. 61 At this point the primary judge addressed the cross-claim. 62 First, his Honour noted (at [139]) that it was common ground that, in order to recover as damages an amount paid by way of settlement, a party must show that the conduct relied upon was a material cause of the settlement being entered into and the amount paid by way of settlement was reasonable. His Honour acknowledged (at [142]) that both of those matters were disputed. 63 His Honour held that the stabbing incident constituted a breach of Mr Joseph's duty to faithfully and diligently discharge his powers and functions in a manner consistent with that of a CEO and a failure to take reasonable care to prevent foreseeable harm to an employee. His Honour also held (at [147]) that it was additionally a breach of Mr Joseph's "duty to faithfully and diligently discharge his duty of care and diligence in a manner of a reasonable person". 64 His Honour then considered (at [148]) whether the breach of these duties was causally connected to the commencement of the two proceedings by Ms Lindsey and whether the settlement of those proceedings was "a natural and reasonably contemplated result" of the breach, citing BNP Paribas v Pacific Carriers Limited [2005] NSWCA 72 at [186] per Giles JA. 65 The primary judge had "no difficulty" in concluding that Mr Joseph's breach of duty was a material cause of the payment of the settlement in the Lindsey assault proceeding. But his Honour was not satisfied that Mr Joseph's conduct was a material cause of the payment of the settlement in the Lindsey discrimination proceeding because in that proceeding, the "facts common to all counts" contained only "passing reference[s]" to the conduct that was the subject of the proceedings before this Court (namely, the stabbing incident and the gala dinner incident). This aspect of the cross-claim was therefore dismissed. 66 His Honour held (at [155]) that the settlement amount paid in the Lindsey assault proceeding was reasonable, noting the amount was proposed during the mediation by the mediator, who was an experienced former Missouri Circuit Court judge, and no reason was advanced as to why the either the amount or the fact of settlement was not reasonable. Consequently, that part of the cross-claim and the associated legal costs were found to be recoverable (at [156]). 67 His Honour concluded (at [156]) that the cross-claim should succeed in respect of the recovery of 70% of the legal costs incurred in the two US proceedings instituted by Ms Lindsey. 68 The primary judge then considered whether the settlement of the Tymeson proceeding was caused by Mr Joseph's conduct during the gala dinner incident or its aftermath, and whether the settlement amount was reasonable (at [161]). 69 His Honour noted (at [162]) that the Tymeson proceeding was against Parnell US and Mr Joseph for alleged sex discrimination, sexual harassment, retaliation and a failure "to make good faith efforts to establish and enforce policies to prevent unlawful discrimination against its employees". His Honour concluded (at [167]) that Mr Joseph's conduct during the gala dinner incident and the subsequent events leading to Ms Tymeson's termination was a material cause of the institution of that proceeding. His Honour also concluded that the settlement amount was reasonable (at [169]), noting that no reasons were advanced by Mr Joseph to suggest otherwise. It followed that the legal costs and settlement amount from that proceeding were recoverable as damages. 70 The primary judge rejected Mr Joseph's claim that he was entitled to be indemnified by Parnell Holdings for the amount he would otherwise have to pay as damages (at [176]). His Honour also rejected Mr Joseph's attempt to resist liability to pay the settlement amounts by reliance on s 3 of the Employees Liability Act 1991 (NSW), holding, in effect, that it was misconceived (at [180]–[181]). Additionally, his Honour rejected Mr Joseph's submission that Parnell had condoned his conduct or waived any right to claim damages for it (at [187]). 71 The primary judge also considered the issue of set-off, or whether the matters before him should resolve on the basis of a net judgment sum (by which Mr Joseph's outstanding entitlements would be deducted from any amount he might be ordered to pay on the cross-claim). His Honour declined to make a single, net order (at [130], [190]). The appeal 72 The notice of appeal contains an astonishing 24 grounds. Some are pleaded in the alternative; some are duplicates of others. 73 In short, the appeal challenges: (1) the award of costs (grounds 1 and 2); (2) the failure to make findings concerning the alleged breaches of the FW Act for failing to pay accrued but untaken annual leave owing on termination (grounds 3–5) or to give reasons for not doing so (ground 6); (3) the failure to impose civil penalties or to give reasons for not doing so (grounds 7–8); (4) the findings with respect to long service leave (grounds 9–11); (5) the alleged finding that Mr Joseph owed Parnell US obligations under ss 180–182 of the Corporations Act 2001 (Cth) (Corporations Act) (ground 12); (6) the primary judge's conclusion that Mr Joseph was liable for the amount that Parnell US paid in settlement of the Lindsey assault proceeding and for 70% of the legal fees that it incurred in defending the two proceedings she instituted (grounds 13–17); (7) the primary judge's conclusions that Mr Joseph was liable for the amount that Parnell US paid in settlement of the Tymeson proceeding and its associated legal fees (grounds 18–22); and (8) the failure to find that Parnell US had condoned the comments of Mr Joseph at the gala dinner in Hawaii before they were made and was aware and condoned the termination of the employment of Ms Lindsey and/or Ms Tymeson (grounds 23 and 24). 74 Grounds 23 and 24 were abandoned during argument. 75 Grounds 13 and 18, by which Mr Joseph contends that the settlements of (respectively) the Lindsey assault proceeding and the Tymeson proceeding were unreasonable, are also the subject of a notice of contention. The respondents thereby claim that his Honour's conclusions should be upheld on bases additional to those recorded in his reasons for judgment, the details of which are explored below. The cross-appeal 76 The cross-appeal alleges that: (1) if grounds 3–6 of the appeal are upheld, then Mr Joseph's claims under the FW Act should be dismissed because Parnell AU was not liable to pay Mr Joseph's accrued annual leave; liability rests instead with Parnell US, which is not subject to the FW Act (ground 1); (2) the primary judge erred in finding that Mr Joseph's conduct was not a material cause of the payment that Parnell US made to Ms Lindsey in settlement of the Lindsey discrimination proceeding (ground 2); (3) the primary judge erred in limiting the damages awarded to the respondents for legal costs in the two proceedings commenced by Ms Lindsey to 70% of the total costs (ground 3); (4) the primary judge erred in failing to exercise his discretion to give judgment on the whole of Mr Joseph's claim or, alternatively, his claim for long service leave, and the respondents' cross-claim in a single, net amount (ground 4); and (5) the primary judge erred in failing to find that an equitable set-off arises between the amount payable by the respondents to Mr Joseph (or, alternatively, the amount of long service leave only) and the amounts payable by Mr Joseph to the respondents as damages in the cross-claim (ground 5). 77 The respondents seek orders that orders 1–4 of the orders made by the primary judge be set aside, that there be judgment in their favour in the amount of USD930,123.50, post-judgment interest, and costs. The proposed judgment sum is derived by deducting the value of the unpaid entitlements (USD142,425.85 inclusive of pre-judgment interest) from the amount of damages they claim they should have been awarded on their cross-claim (USD1,072,549.35). No issue was raised about the accuracy of these amounts or the appropriateness of such an order in the event that the respondents were to succeed on their cross-appeal. The issues 78 The following are the principal questions arising for determination: (1) Were the respondents entitled to costs or at least the costs of the cross-claim (appeal grounds 1 and 2)? (2) Did the primary judge err in failing to make findings concerning the alleged contraventions of the FW Act or failing to give reasons for not doing so (appeal grounds 3–6)? (3) Did the primary judge err by not imposing civil penalties for contraventions of the FW Act (appeal grounds 7 and 8)? (4) Was Parnell AU liable to pay Mr Joseph's accrued annual leave before the entry of judgment against Parnell US (cross-appeal ground 1)? (5) Who carried the burden of proving whether any long service leave had been taken (appeal grounds 9–11)? (6) Did the primary judge err in his findings concerning the settlement of the US proceedings (appeal grounds 12–22)? (7) Do the circumstances warrant a single, net judgment or give rise to an equitable set-off (cross-appeal grounds 4 and 5)? Were the respondents entitled to costs (appeal grounds 1 and 2)? 79 The primary judge's order, it will be recalled, was that Mr Joseph pay the respondents' costs on the basis that there was no reason that costs should not follow the event. 80 By ground 1 of the notice of appeal Mr Joseph alleged that his Honour erred by failing to have regard to s 570 of the FW Act. In the alternative, he alleged that his Honour erred by failing to provide any reasons for ordering that he pay the respondents' costs. That is the allegation in ground 2. 81 For the following reasons it was common ground on the appeal that the order should not have been made. 82 First, his Honour had not heard from the parties when the parties had sought to be heard. In this respect his Honour denied the parties procedural fairness. 83 The short minutes of order submitted by the parties to the Court contained draft orders enabling his Honour to dispose of the substantive questions and the question of costs. The substantive questions were the subject of proposed orders 1 to 4 inclusive. They appeared on the first page of the parties' short minutes. Page 2 included the following proposed orders: 5. The respondents/cross-claimants to serve and provide to his Honour's Associate any written submissions as to any cost order to be made in the proceedings (including in relation to any orders pursuant to section 570 of the Fair Work Act 2009 (Cth)) and any evidence in support by 19 June 2020. 6. The applicant/cross-respondent to serve and provide to his Honour's Associate any written submissions as to any cost order to be made in the proceedings (including in relation to any orders pursuant to section 570 of the Fair Work Act 2009 (Cth)) and any evidence in support by 26 June 2020. 7. The question of any costs order to be made in the proceedings be decided on the papers. 84 The orders were made and the reasons published on 17 June 2020, before the timetable for submissions had begun to run. 85 In all likelihood, his Honour did not appreciate that there were two pages to the short minutes of order. As soon as judgment was published and the orders were made, however, the matter should have been brought to his Honour's attention. The order could have been varied or set aside under r 39.05 of the Rules not least because the error arose from "an accidental slip" (para (h)) or if, as would be expected, the respondents, being the party in whose favour the order was made, consented (para (f)). Both parties are at fault in this respect. 86 Second, and in any event, there are strict limitations on the Court's power to award costs in a case such as this. 87 Section 570 of the FW Act provides that: 570 Costs only if proceedings instituted vexatiously etc. (1) A party to proceedings (including an appeal) in a court (including a court of a State or Territory) in relation to a matter arising under this Act may be ordered by the court to pay costs incurred by another party to the proceedings only in accordance with subsection (2) or section 569 or 569A. Note: The Commonwealth might be ordered to pay costs under section 569. A State or Territory might be ordered to pay costs under section 569A. (2) The party may be ordered to pay the costs only if: (a) the court is satisfied that the party instituted the proceedings vexatiously or without reasonable cause; or (b) the court is satisfied that the party's unreasonable act or omission caused the other party to incur the costs; or (c) the court is satisfied of both of the following: (i) the party unreasonably refused to participate in a matter before the FWC; (ii) the matter arose from the same facts as the proceedings. 88 It is apparent that s 570 slipped his Honour's mind at the time he was writing the second judgment. 89 Third, in the course of argument on the appeal, Mr Barnett of counsel, who appeared with Mr Allen for the respondents, acknowledged that none of the exceptions in s 570(2) applied. He also acknowledged, notwithstanding written submissions to the contrary, that the proceedings instituted by Mr Joseph were proceedings "in relation to a matter arising under [the] Act". Consequently, he conceded that, insofar as the claims in the originating application were concerned, there should have been no order as to costs and this Court should so order. The concession was properly made. 90 In Stanley v Service to Youth Council Inc (No 3) (2014) 225 FCR 357, White J held that the limitation on the Court's power to award costs applies to any proceedings in which a claim is made under the FW Act regardless of whether a claim is also made in the accrued jurisdiction or under other federal legislation. His Honour explained at [28]: The limitation on courts' powers with respect to costs operates in respect of any "party to proceedings", provided that those proceedings relate to a "matter" arising under the FW Act. On its face, the limitation operates whenever those considerations are satisfied, whether or not the proceedings also include claims under other federal legislation or in the accrued jurisdiction. The FW Act does not define the word "proceedings", but generally it is used to refer to the action or means by which a party moves a court to grant the desired relief, rather than to individual claims or causes of action in the action. Thus, in Braeside Bearings Pty Ltd v HJ Brignell & Associates (Boronia) [1996] 1 VR 17 at 20, Tadgell JA said of the word "proceeding" in s 3 of the Supreme Court Act 1986 (Vic): [It] is used as a generic expression to embrace what was formerly comprehended individually and respectively by the expressions "action", "cause" and "matter". The expression "matter in the court" in the definition of "proceeding" in s 3 refers on that assumption to a proceeding in the sense of a vehicle by which the jurisdiction of the Court is invoked and not to the subject matter of a justiciable dispute. 91 Stanley was followed by a five-member bench (Tracey, Gilmour, Jagot, White and Beach JJ) in Melbourne Stadiums Ltd v Sautner (2015) 229 FCR 221. 92 While the FW Act claims may have "assumed only passing reference during the course of the proceeding", as the primary judge put it, that did not mean that the proceeding was not "in relation to a matter arising under the Act". As White J observed in Stanley at [33], "[t]he possibility that a matter arising under the FW Act may be so minor as to be insignificant in comparison with other causes of action does not require consideration". What matters is that Mr Joseph applied for relief for contraventions of the FW Act. The source of the Court's jurisdiction was the FW Act. See Energy Australia Yallourn Pty Ltd v Automotive, Food, Metal, Engineering, Printing and Kindred Industries Union (2018) 264 FCR 342 at 365–366 [99]–[103] (Rares and Barker JJ), with which Flick J relevantly agreed at 373 [139]. In Energy Australia, their Honours considered that "the critical fact" for the purposes of s 570(1) was that the applicant claimed relief under the FW Act. That is so, the majority held, even if the Court finds it lacks jurisdiction to hear and determine the claim. The Court relied on Re McJannett; Ex parte Australian Workers' Union of Employees, Queensland (No 2) (1997) 189 CLR 654 at 656, in which Brennan CJ, McHugh and Gummow JJ said of an analogue of s 570(1) that the test for determining "whether a proceeding is in a matter arising under the Act … is whether the right or the duty that is sought to be enforced owes its existence to a provision of the Act". 93 Here, several of the rights Mr Joseph was seeking to enforce owed their existence to various provisions of the FW Act. Thus, contrary to the proposition advanced in the respondents' written submissions, it was not open to the primary judge to conclude that the proceedings were not in relation to a matter arising under the FW Act. 94 The remaining questions are whether the cross-claim was a separate proceeding for the purposes of s 570 and if, so, whether the cross-claim proceeding was "in relation to a matter arising under the FW Act". 95 The cross-claim did not seek any relief under the FW Act or plead a cause of action based on the FW Act. 96 The respondents argued that, in both form and substance, their cross-claim was "an action or means by which the respondents moved the Court to grant [the relief they desired]"and was a separate proceeding heard for convenience with the appellant's claims. There is authority to that effect. 97 In Gray v Sirtex Medical Limited (2011) 193 FCR 1, 12 at [35] the Full Court (Bennett, Gilmour and Gordon JJ) said as much. Their Honours cited Grundy v Lewis (1995) 62 FCR 567 (Kiefel J) in support of the proposition. But Grundy v Lewis was not to the point. In Grundy v Lewis, Kiefel J did not hold that a cross-claim is a separate proceeding; her Honour held that it was a separate pleading (at 571). For the purposes of pleadings and directions which follow it is treated as an originating process (at 571–2). The point there was that O13 r 4 of the former Rules which entitled a respondent to amend "his" defence where an applicant amends "his" statement of claim, does not allow a respondent to amend its cross-claim; leave is required. That is beside the point here. 98 Regardless, there is old English authority to the effect that a claim and a cross-claim (or counter-claim as it was formally known) are "wholly independent suits which, for convenience of procedure, are combined in one action": see, for example, Winterfield v Bradnum (1893) 3 QBD 324 at 326 (Brett LJ); 326 (Cotton LJ). In Aurel Forras Pty Ltd v Graham Karp Developments Pty Ltd [1975] VR 202 at 218 Menhenitt J held that "a counter-claim is a proceeding and an initiating proceeding". 99 Mr Barnett developed the argument this way: Of course, where the claims are all brought in one originating process like a statement of claim, there is no separate proceedings. But that has a degree of sense about in at least this way. Suppose that we had sued first for damages and then Mr Joseph had cross-claimed for some entitlement under the Fair Work Act. The effect of saying it is all one proceeding is that automatically by virtue of that what are orthodox, ordinary commercial proceedings become subject to the immunity in respect of costs, and all we say is that's not quite the intention of the legislature. They are concerned to deal with the means by which a party brings forward a claim for relief under the Fair Work Act, and if that means for that purpose is the statement of claim, that is what is immunised. It doesn't necessarily immunise all cross-claims simply because under the court's rules they are brought and heard together. It would be, in my submission, somewhat odd if one had a different outcome depending on whether or not we had chosen to use the procedural expedient of a cross-claim as distinct from commencing a separate proceeding in this court where this court would have jurisdiction under the Corporations Act, commence a different proceeding in this court and then apply for an order administratively that the two proceedings with two different numbers be heard together with evidence in one being evidence in the other. If that led to a different result, that would be an unusual outcome, we would say. 100 Mr Barnett relied on ACE Insurance Limited v Trifunovski (No 3) [2012] FCA 975, in which Perram J made an order in favour of a cross-claimant where the principal proceeding was brought under the Workplace Relations Act 1996 (Cth) (WR Act). 101 Mr Joseph submitted that there was only one proceeding before the Court, although it involved a number of separate claims, each of which might have been the subject of a separate proceeding. He relied principally on Sautner in which the Full Court held at [156]–[157]: The word "proceeding" is not defined in the Fair Work Act. In the context of s 570 it bears a different meaning from the word "matter". "Matters", in the sense of claims or causes of action or their underlying controversies, are raised in the "proceeding" or "proceedings" which is or are prosecuted in the Court: cf Shea v Energy Australia Services Pty Ltd (No 7) [2014] FCA 1091 at [22] (Jessup J). As Gray J said in Geneff v Peterson (1986) 19 IR 40 at 90, in dealing with the construction of s 197A of the Conciliation and Arbitration Act 1904 (Cth) (a predecessor of s 570): "[T]he section operates in relation to a 'proceeding'. There is only one proceeding before the Court, although that proceeding involves a number of separate claims, each of which might have been the subject of a separate proceeding. … In my view, it is impossible to split the claims within a proceeding for the purpose of the application of s 197A." See also Qantas Airways Limited v Transport Workers Union of Australia (No 2) (2011) 211 IR 119 at 182 (Moore J); Grout v Gunnedah Shire Council (No 3) (1995) 59 IR 248 at 260-1 (Moore J); Goldman Sachs JBWere Services Pty Ltd v Nikolich (2007) 163 FCR 62 at 65 and 69. There was a single proceeding which was commenced and prosecuted to judgment in the County Court. Mr Sautner made claims under the Fair Work Act and at common law. The claims under the Fair Work Act were "matters" within the meaning of s 570(1) of the Fair Work Act. The proceeding was, as a result, a proceeding in relation to a matter arising under that Act. Section 570(1) operated to preclude the Court from ordering MSL ('another party to the proceedings') to pay any costs incurred by Mr Sautner in prosecuting his claims unless he could satisfy the Court that one of the exceptions, provided for in s 570(2), applied. 102 Mr Joseph insisted that a cross-claim was not a separate proceeding, noting by reference to r 15.01 of the Rules that a cross-claim is made "in a proceeding". He argued that, if the cross--claim were a separate proceeding, the Court would lack jurisdiction to hear it. 103 The better view is that a cross-claim is a separate proceeding heard for convenience with Mr Joseph's proceeding, as the respondents submitted. 104 Counsel for Mr Joseph did not address the respondents' argument or the authorities upon which they relied. The question is not answered by reference to Sautner or Stanley, since neither of those cases nor the authorities upon which they drew concerned a cross-claim or like pleading. The fact that the Rules refer to a cross-claim being made "in a proceeding" does not inform the question of whether a cross-claim is a proceeding either as a matter of general law or for the purposes of s 570 of the FW Act. In any event, there is no reason in principle why there could not be a proceeding within a proceeding. Finally, the submission that the Court would lack jurisdiction to hear the cross-claim if it were a separate proceeding ignored the fact that the cross-claim pleaded claims under the Corporations Act. It also overlooked the jurisdiction conferred on the Court by s 4(2) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth). 105 But that is not the end of the inquiry. If the cross-claim is properly to be regarded as a separate proceeding, was it also a proceeding "in relation to a matter arising under the FW Act"? 106 Trifunovski is of no assistance. It was concerned with the scope of the costs jurisdiction under the WR Act. The relevant provision was s 824(1), which, save in circumstances of the kind covered by s 570(2) of the FW Act, protected "a party to a proceeding in a matter arising under [the] Act" (emphasis added). In that case Perram J stated that it was established that separate claims pursued under statutes other than the WR Act are not proceedings under that Act and therefore do not attract the immunity in s 824(1), citing Buchanan J in McDonald v Parnell Laboratories (Aust) (No 2) (2007) 164 FCR 591, 596 at [16]–[18]. The phrase "in a matter arising under [the] Act" is narrower than the phrase "in relation to a matter arising under [the] Act" in s 570(1) of the FW Act and, as Stanley and Sautner establish, proceedings are in relation to a matter arising under the Act even if claims are pursued under other statutes or, for that matter, at common law. 107 When the FW Act was enacted, s 570(1) did not include either phrase. It relevantly provided a general protection from the burden of a costs order to "a party to a proceeding in a court exercising jurisdiction under this Act". 108 The Explanatory Memorandum to the Fair Work Bill explained at [2228]–[2229]: The ability of the courts to award costs in workplace relations matters has been limited since 1904 and is part of the policy of discouraging legalism in proceedings before industrial courts. However, this clause departs from section 824 of the WR Act, in that it is limited to proceedings in which a court is exercising jurisdiction under the Bill rather than in any matter arising under the Bill. A similar change was made to clause 565 (see above). As noted above, the 'matters arising' language has been interpreted broadly. A proceeding not brought under the WR Act could still arise under the WR Act. The broad application of the costs provision has given rise to technical arguments that the provision does not apply in a range of proceedings not involving exercise of jurisdiction under the WR Act and its predecessors (see, e.g., Tristar Steering and Suspension v Industrial Relations Commission (NSW) (No. 2) [2007] FCAFC 95; 159 FCR 274). Given the nature and complexity of 'matters arising' that are determined before State Supreme Courts, the Federal Court and the High Court, it is not appropriate that the limitation on costs orders apply to matters arising under the Bill which do not involve the exercise of jurisdiction under the Bill. 109 In Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union v ALS Industrial Australia Pty Ltd (No 2) (2015) 235 FCR 366, 368 at [12] Dowsett, Tracey and Katzmann JJ discussed the context of the phrase in its present form and the drafting history: Section 570(1), in its present form, commenced operation on 1 January 2013. The words "in relation to a matter arising under this Act" replaced the words "exercising jurisdiction under this Act". The explanatory memorandum for the amending bill said that the "amendment confirms that the FW Act is generally a 'no costs' jurisdiction (including in appeal proceedings)." This change broadened the limitation on the Court's power to award costs in proceedings under the FW Act … 110 The phrase "in relation to" is one of "wide and general import": Energy Australia at [98] (Rares and Barker JJ), citing Fountain v Alexander (1982) 150 CLR 615, 629 (Mason J). 111 In O'Grady v Northern Queensland Co. Ltd (1990) 169 CLR 356 at 376, McHugh J observed that: The prepositional phrase "in relation to" is indefinite. But, subject to any contrary indication derived from its context or drafting history, it requires no more than a relationship, whether direct or indirect, between two subject matters. 112 In Stanley at 363 [26], White J said: The phrase 'in relation to' is usually taken to indicate some relationship or connection between two subject matters: Smith v Federal Commissioner of Taxation (1987) 164 CLR 513 at 533. The degree or closeness of the contemplated connection is to be determined by the statutory context: Joye v Beach Petroleum NL (1996) 67 FCR 275 at 285. 113 Neither the context nor the drafting history suggests that the relationship should be a narrow one. 114 Section 824 of the WR Act was preceded by s 197A of the Conciliation and Arbitration Act 1904 (Cth), which was inserted in 1973. While previously there were some restrictions on costs, it was the amendment introduced in 1973 which abolished the general power of both the Commission and the Industrial Court to order costs against parties in proceedings arising under the Conciliation and Arbitration Act. It relevantly provided that "a proceeding, including an appeal, before the Court, or before a court of a State or Territory, in a matter arising under [the] Act … shall not be ordered to pay any costs incurred by any other party to the proceeding except where the party against whom the order is made instituted the proceeding vexatiously or without reasonable cause". In his second reading speech, the relevant Minister, Hon Clyde Cameron MHR, said that the abolition of the power to order costs was part of the government's policy of "bringing the courts to the people, of overcoming the deterrent which often prevents a person from seeking to right a wrong because of the burden of costs he might incur where his argument has failed to carry the day". If this is to be taken as the purpose of the current provision, as it must surely be, there is no reason to construe the words of the section narrowly. 115 On any view, s 570 is remedial and beneficial and should therefore be interpreted beneficially. That means that it should be given "a fair, large and liberal" interpretation: IW v City of Perth (1977) 191 CLR 1 at 11 (McHugh J). 116 So, was there a relationship or connection between the cross-claim and Mr Joseph's claim? 117 The cross-claim was a claim for damages and declaratory relief arising out of the settlement of the US litigation. Mr Joseph's claim was unrelated to the US litigation. Yet, there was certainly a relationship or connection between the cross-claim and Mr Joseph's claim, including the claims brought under the FW Act. 118 First, while not all the facts were common, there was a common substratum of facts. 119 Second, in their defence the respondents relied on conduct pleaded in the cross-claim to defeat Mr Joseph's claim that his termination was wrongful and that he was entitled to either redundancy pay or pay in lieu of notice, both of which claims gave rise to allegations of contraventions of the FW Act. By paragraph 33 of the statement of claim, for example, Mr Joseph alleged that the second termination notice issued on 18 December 2017 was unlawful because he had not engaged in serious misconduct. In paragraph 33 of their defence, the respondents denied the allegation and, amongst other things, alleged that the termination was not unlawful because Mr Joseph had engaged in the conduct pleaded in the cross-claim or the conduct which he admitted in his defence to the cross-claim and the evidence he filed on the cross-claim. 120 Third, in their defence the respondents asked that, if Mr Joseph were successful in whole or in part, they only be required to pay the balance, if any, of the difference between the damages awarded in the cross-claim less the amount awarded to Mr Joseph for his claims. 121 There was certainly a connection or relationship between the two proceedings sufficient to satisfy the terms of s 570(1). The cross-claim in this case was indeed a proceeding in relation to a matter arising under the FW Act. 122 It follows that ground 1 of the notice of appeal should be upheld. Ground 2 does not arise. The costs order made by the primary judge should be set aside. Since the respondents did not submit that any of the exceptions in s 570(2) applied, there should be no order as to costs. Did the primary judge err in failing to make findings concerning the alleged contraventions of the FW Act or failing to give reasons for not doing so (appeal grounds 3 to 6; cross-appeal ground 1)? 123 The entitlement to annual leave is one of the National Employment Standards laid down in Div 6 of Pt 2-2 of the FW Act. Where an employee has untaken paid annual leave at the time their employment is terminated, s 90(2) of the FW Act requires the employer to pay the employee "the amount that would have been payable to the employee had the employee taken that period of leave". Section 44(1) provides that an employer must not contravene a provision of the National Employment Standards. 124 Paragraph 49 of the statement of claim alleged that: At all material times, Mr Joseph was entitled to: a. four weeks paid annual leave for each year of service with Parnell Corporate Services [Parnell AU] and Parnell US; and b. payment on termination of employment of any accrued untaken annual leave. Particulars Mr Joseph relies on ss 43, 44, 61, 87 and 90(2) of the FW Act. 125 In paragraph 52 of the statement of claim, Mr Joseph alleged that Parnell AU had not paid him his accrued statutory entitlements. 126 In their defence (the Second Amended Defence), the respondents admitted both these allegations without qualification. 127 In paragraph 54 of the statement of claim, Mr Joseph alleged that Parnell AU was liable to pay him compensation in respect of the unpaid statutory entitlements, relying on s 545(2) of the FW Act. In paragraph 53 he alleged that Parnell AU was not permitted to make any deduction from any sum to which he was entitled on termination. 128 The respondents accepted that Mr Joseph was entitled to be paid his accrued untaken annual leave and there was no dispute about the amount. 129 There was a dispute, however, about whether Parnell AU was liable to pay the accrued leave. If it were liable, it was common ground that the relevant provisions of the FW Act applied and that it was open to his Honour to order that Parnell AU pay a civil penalty for not honouring its obligation. But the respondents contended that Parnell AU did not contravene the FW Act because Mr Joseph's entitlement to annual leave arose solely from his employment contract with Parnell US. They argued that, properly construed, for the duration of the secondment the US contract exclusively governed Mr Joseph's entitlements to both remuneration and leave. 130 The respondents' argument in this Court, neatly summarised in their submissions on ground 1 of the cross-appeal, was as follows: 19. Properly construed, the 2012 Contract created new entitlements to remuneration and annual leave which suspended or replaced, during the period of secondment, what otherwise would be duplicate annual leave and remuneration entitlements under the 2011 Contract. A significant pointer in that direction is clause 2(b). 20. In effect, the secondment constituted a tri-partite variation of the employment arrangements for Mr Joseph: a. Mr Joseph was freed from his obligation to work exclusively for PCS and became subject to an exclusive obligation to work for Parnell US. His rights to remuneration and annual leave as against PCS were suspended or replaced by offsetting rights against Parnell US; b. Parnell US gained the benefit of service from Mr Joseph but became subject to obligations to pay his remuneration and entitlements (including entitlements calculated by reference to Mr Joseph's service with PCS); and c. PCS lost the benefit of Mr Joseph's service but was relieved from obligations to pay remuneration and entitlements (including existing entitlements, if any) in relation to the period of secondment. (cf Concut Pty Ltd v Worrell (2000) 176 ALR 693 at [19]-[23]; Cohen v iSOFT Group Pty Ltd (2013) 298 ALR 516 at [35]-[47]) 21. Accordingly, if the primary judge erred in failing to determine Mr Joseph's claims of breach of the Fair Work Act, his Honour should have, and this Court should now, dismiss those claims on the basis that PCS did not have any obligation to pay the annual leave entitlements claimed by Mr Joseph. 131 A similar argument was put to the primary judge, apparently without complaint, despite the admission made by the respondents in paragraph 8 of their defence that the terms of the US contract were "in addition to and supplemented" the Australian contract. As the respondents apparently departed from their pleading in this respect with his consent or at least acquiescence, Mr Joseph was not entitled to hold the respondents to that pleading: Gould and Birbeck and Bacon v Mount Oxide Mines Ltd (in Liquidation) (1916) 22 CLR 490 at 517 (Isaacs and Rich JJ); Betfair Pty Limited v Racing New South Wales (2010) 189 FCR 356 at 374–375 [55] (Keane CJ, Lander and Buchanan JJ). 132 The primary judge made no relevant findings on the question of which of the companies was liable to pay the accrued annual leave entitlement. At the time of the primary judgment, the question remained unresolved. That was a critical omission, since it was the basis for an allegation that Parnell AU had contravened the FW Act, that pecuniary penalties should have been paid, and that Mr Joseph was entitled to be paid those penalties. By the same token, it was an obvious oversight. 133 Rather than raising the matter with his Honour, however, and enabling him to rectify the error in accordance with r 39.05 of the Rules, the parties resolved the dispute themselves. The short minutes to which Mr Joseph agreed included an order requiring Parnell US to pay the accrued leave entitlement. 134 It follows that, while his Honour ought to have determined whether Parnell AU was in contravention of the FW Act by failing to pay the unpaid accrued annual leave before requiring the parties to bring in short minutes of order, he was relieved of that burden by the parties. In other words, that aspect of the case was settled by agreement. As the respondents put it in their written submissions, having agreed to judgment being entered against Parnell US rather than Parnell AU, Mr Joseph cannot now maintain appeal grounds which depend on him having an entitlement against Parnell AU. In these circumstances, grounds 3 to 6 of the appeal are untenable and it is unnecessary to decide ground 1 of the cross-appeal. Did the primary judge err by not imposing civil penalties for contraventions of the FW Act (grounds 7 and 8)? 135 The answer to this question is "no". Once the parties agreed that Parnell US was to pay the unpaid accrued annual leave, grounds 7 and 8 fall away. Who carried the burden of proving whether any long service leave had been taken (grounds 9 to 11)? 136 In the statement of claim (paragraphs 57–59) Mr Joseph pleaded that, at the time he was summarily terminated from his employment, he was entitled to USD116,010 "in respect of accrued long service leave pursuant to s 9(a) of the Australian contract" and AUD7,408.22 in respect of superannuation contributions pursuant to cl 7 of each of the contracts, and that neither Parnell AU nor Parnell US had paid that entitlement. The pleading was defective because it failed to plead the material facts but it appears that the point was never taken. 137 In their defence the respondents denied the allegations and pleaded that: (1) at the time Mr Joseph was summarily dismissed, he had accrued long service leave equivalent to 42 days or USD71,299.09; (2) neither Parnell AU nor Parnell US had paid Mr Joseph that amount or the amount claimed; (3) Parnell AU made superannuation contributions on his behalf in the amount of $133.33 on each of 13 October 2017, 13 November and 13 December 2017; and (4) Mr Joseph had no accrued unpaid entitlement to any superannuation contribution at the time of his summary dismissal. 138 No evidence was called to support Mr Joseph's claim concerning the quantum of his entitlement. 139 There was no dispute that the long service leave entitlement arose under the Long Service Leave Act 1955 (NSW) (Long Service Leave Act). The Australian contract provided for long service leave in accordance with "statutory entitlements". The contract was made in NSW and cl 21 of the contract stipulated that it was governed by the laws of NSW. The US contract recognised Mr Joseph's service in Australia for the purpose of calculating long service leave (amongst other entitlements). 140 The primary judge dealt with this issue in his second judgment. His Honour began by observing that the respondents accepted that an amount in respect of long service leave should have been, but was not, paid and that there was a dispute about "the quantification" of the amount. His Honour identified the competing positions and accepted the respondents' calculation. We are not persuaded that his Honour erred in doing so. 141 His Honour reasoned as follows: 6 The Respondents in their Defence admitted that Mr Joseph had accrued unpaid long service leave entitlements as at the date of termination of his services on 18 December 2017. The Defence expressly set forth the entitlement to which they maintained Mr Joseph was entitled, namely, 42.2 days. The Respondents proffered a calculation of that amount. 7 The onus forever rested upon Mr Joseph to make good the claim that he made. No evidence was led by Mr Joseph to establish the amount of long service leave he in fact had taken and the outstanding amount of leave to which he was entitled. The simple fact is that he has failed to discharge the onus of making good his claim to the higher amount. Mr Joseph's Outline of Submissions filed during the course of the hearing maintained that he was entitled to payment of the full amount of his leave entitlements as the Respondents had "not led any evidence that [he] had taken any long service leave". But, in so submitting, Mr Joseph was even then seeking to impermissibly transfer to the Respondents the onus which properly lay upon him and not the Respondents. 8 The Respondents by their written Closing Submissions expressly alerted Mr Joseph to the fact that he had "put on no evidence establishing that his entitlement to long service leave was any greater than" the amount admitted in the Defence. No application was made at the hearing, nor is any application now made to re-open his case to present new evidence. In the absence of any evidence from Mr Joseph establishing any greater amount than that the subject of admission in the Respondents' Defence, it is that amount for which judgment should be entered. 142 By grounds 9 to 11 of the notice of appeal Mr Joseph alleged that his Honour erred: (1) in failing to calculate his entitlement to long service leave on termination of employment in accordance with ss 4(2)(a)(i) and 5 of the Long Service Leave Act; (2) in holding that he bore "an additional evidentiary onus" of proving the amount of long service leave owing on termination beyond the amount admitted in the respondents' defence when there was evidence of his length of service and remuneration at the time of termination; and (3) in holding that he bore an onus of proving that he did not take long service leave during his employment with Parnell AU. 143 The factual foundations for his Honour's findings were not disputed. In other words, Mr Joseph did not lead evidence to establish the amount of long service leave he had taken or the amount to which he was entitled. All that the primary judge had was the bare allegation in the statement of claim. 144 Ordinarily, the burden of proving all the facts essential to a civil claim rests with the claimant. As Walsh JA put it in Currie v Dempsey (1967) 69 SR (NSW) 116 at 125 (FC): [T]he burden of proof in the sense of establishing a case, lies on a plaintiff if the fact alleged (whether affirmative or negative in form) is an essential element in his cause of action, eg, if its existence is a condition precedent to his right to maintain the action. The onus is on the defendant, if the allegation is not a denial of an essential ingredient in the cause of action, but is one which, if established, will constitute a good defence, that is, an "avoidance" of the claim which, prima facie, the plaintiff has. 145 The governing section of the Long Service Leave Act was s 4. It relevantly provided: (1) Except as otherwise provided in this Act, every worker shall be entitled to long service leave on ordinary pay in respect of the service of the worker with an employer. (a) Subject to paragraph (a2) and subsection (13) the amount of long service leave to which a worker shall be entitled shall— (i) in the case of a worker who has completed at least 10 years service with an employer be: (A) In respect of 10 years service so completed, 2 months, and (B) In respect of each 5 years service with the employer completed since the worker last became entitled to long service leave, 1 months, and (C) On the termination of the worker's services after the completion of 15 years service, in respect of the number of years service with the employer completed since the worker last became entitled to an amount of long service leave, a proportionate amount on the basis of 2 months for 10 years service, and (ii) in the case of a worker who has completed at least 10 years service but less than 15 years with an employer and whose services with the employer are terminated or cease for any reason, be a proportionate amount on the basis of 3 months for 15 years service, … (5) (a) Where the services of a worker are terminated otherwise than by the worker's death and any long service leave— (i) to which the worker was entitled has not been taken, or (ii) accrues to the worker upon such termination and has not been taken, the worker shall, subject to subsection (13), be deemed to have entered upon the leave from the date of such termination and the employer shall forthwith pay to the worker in full the worker's ordinary pay for the leave less any amount already paid to the worker in respect of that leave. (Emphasis added.) 146 "Termination" was defined in subsection (13) to mean "termination by any person or by any cause". The subsection was otherwise irrelevant. 147 It follows from the terms of s 4(5) that it is an essential element of a claim for unpaid long service leave on termination that the worker is both entitled to the leave and has not taken it. For this reason, the burden of proving that Mr Joseph had not taken any long service leave rested with him and that was a burden he failed to discharge. 148 It follows that grounds 9, 10, and 11 of the appeal should be dismissed. Did the primary judge err in his findings concerning the settlement of the US proceedings (appeal grounds 12–22, cross-appeal grounds 2 and 3)? 149 This question relates to the disposition of the cross-claim. 150 In the cross-claim, the respondents alleged that Mr Joseph had breached his duties as CEO and director causing them loss, and sought an order, whether by way of set-off or judgment in a net amount reflecting "a reduced liability". In his defence to the cross-claim, Mr Joseph admitted that he owed duties to all three corporate respondents, amongst other things to faithfully and diligently perform the duties and exercise the powers consistent with his position as CEO of each of the companies in the Parnell group and to exercise reasonable care and skill. Breach, causation and quantum were in issue. 151 Grounds 13 to 17 of the appeal relate to the settlement of the Lindsey proceedings and grounds 18 to 22 to the settlement of the Tymeson proceeding. Ground 12 raises a discrete point about the scope of Mr Joseph's duties. Duties under the Corporations Act 152 By ground 12, Mr Joseph alleged that the primary judge erred in finding that he owed Parnell US duties pursuant to ss 180–182 of the Corporations Act. 153 Mr Joseph submitted that the primary judge "determined" at [135] of his reasons that he owed these duties to all respondents when the respondents only pleaded he owed them to the Australian companies, which he admitted; and that his Honour was in error in relying on those duties when determining that Mr Joseph was liable on the cross-claim, in whole or in part, to Parnell US. It is common ground that Mr Joseph did not owe duties under the Corporations Act to Parnell US. 154 This ground must be dismissed. While the primary judge discussed the duties Mr Joseph owed under the Corporations Act in [135] of his reasons, he did not determine that Mr Joseph owed Parnell US duties under the Corporations Act, either in [135] or anywhere else. The settlement of the US proceedings 155 With respect to the proceedings brought by Ms Lindsey against Parnell US, Mr Joseph alleged that the primary judge erred: (1) in finding that the settlement in the Lindsey assault proceeding was reasonable when there was no, or no sufficient, evidence to support such a finding (ground 13); (2) in holding that Mr Joseph carried the onus of proving that the settlement of the Lindsey assault proceeding was not reasonable (ground 14); (3) in failing to consider the various claims made by Ms Lindsey that were the subject of the settlement of the Lindsey assault proceeding and whether those claims amounted to a breach by Mr Joseph of duties owed to Parnell US (ground 15); (4) because the amount paid in settlement of the Lindsey assault proceeding was not within Mr Joseph's contemplation (nor that of a reasonable person in his position) having regard to the nature of the legal proceeding between Ms Lindsey and Mr Joseph (ground 16); and (5) in finding that Mr Joseph should pay 70% of the legal costs incurred in the two Lindsey proceedings (ground 17). 156 In the cross-appeal, the respondents allege that the primary judge erred in finding that Mr Joseph's conduct was not a material cause of the payment made in settlement of the Lindsey discrimination proceeding, and in limiting their costs-related damages to 70% of the legal costs incurred in defending the two Lindsey proceedings brought. 157 With respect to the Tymeson proceeding, Mr Joseph alleges that the primary judge erred: (1) in finding that the settlement was reasonable, because there was no evidence or insufficient evidence to support it (ground 18); (2) in finding that Mr Joseph carried the onus of proving that the settlement was not reasonable (ground 19); (3) in failing to consider the various claims made by Ms Tymeson which were the subject of the settlement of the Tymeson proceeding and whether those claims constituted a breach by Mr Joseph of his duties to Parnell US (ground 20); (4) because the amount paid in settlement of the Tymeson proceeding was not within Mr Joseph's contemplation (or that of a reasonable person in his position) having regard to the nature of the legal proceeding between Ms Tymeson and Mr Joseph (ground 21); and (5) in finding that Mr Joseph should pay the legal costs of the Tymeson proceeding (ground 22). 158 The parties agreed that these allegations raise the following questions. 159 The first is whether the primary judge erred in holding that the respondents had satisfied causation in respect of, and the reasonableness of, the settlement amount relating to the Lindsey assault proceeding. If the answer is yes, the parties agreed that grounds 13 to 17 of the appeal should be allowed; and, if not, that they should be dismissed. 160 The second is whether his Honour erred in holding that the respondents had satisfied causation in respect of, and the reasonableness of, the settlement amount of USD180,000 for the Tymeson proceeding. If the answer is yes, the parties agreed that grounds 18 to 22 of the appeal should be allowed; and, if not, that they should be dismissed. 161 The third is whether his Honour erred in holding that the respondents had not established causation in respect of, and the reasonableness of, the settlement amount of USD70,000 for the Lindsey discrimination proceeding and the respondents' legal costs in respect of that proceeding. If the answer is yes, the parties agreed that grounds 2 and 3 of the cross-appeal should be allowed; and, if not, that they should be dismissed. 162 For the reasons that follow, the answer to the first question is no, the second question no, and the third question yes. Accordingly, grounds 13 to 22 of the appeal should be dismissed and grounds 2 and 3 of the cross-appeal should be allowed. Relevant principles 163 Although contested below, it was not in issue on the appeal that Mr Joseph's conduct, insofar as it was the target of any of the three US proceedings, was conduct in which he engaged in breach of duties that he owed to each of the corporate respondents (and, at the very least, to Parnell US). At issue presently is whether Parnell US can recover from Mr Joseph, as damages suffered in consequence of those breaches, the amounts that it paid in settlement of those proceedings. Whether it can depends on whether the making of those payments "resulted from the breach": Reg Glass Pty Ltd v Rivers Locking Systems Pty Ltd (1968) 120 CLR 516, 523 (Barwick, McTiernan and Menzies JJ, Windeyer and Owen JJ dissenting but not on this point of principle). In other words, it turns on ordinary notions of causation and remoteness: did Mr Joseph's breaches of duty cause the settlement payments that Parnell US ultimately made; and were those sums of a kind that was the reasonably foreseeable consequence of those breaches? 164 In March v Stramare (E&MH) Pty Ltd (1991) 171 CLR 506 at 509 Mason CJ, with whom Toohey and Gaudron JJ agreed, made the following observations about causation at common law: In philosophy and science, the concept of causation has been developed in the context of explaining phenomena by reference to the relationship between conditions and occurrences. In law, on the other hand, problems of causation arise in the context of ascertaining or apportioning legal responsibility for a given occurrence. The law does not accept John Stuart Mill's definition of cause as the sum of the conditions which are jointly sufficient to produce it. Thus, at law, a person may be responsible for damage when his or her wrongful conduct is one of a number of conditions sufficient to produce that damage. 165 It has long been accepted that conduct that infringes upon a plaintiff's legal rights "may be causally connected with the sustaining of loss or damage even though other factors may have contributed to the loss or damage": Henville v Walker (2001) 206 CLR 459, 490 [97] (McHugh J, with whom Gummow and Hayne JJ agreed). In Hunt & Hunt v Mitchell Morgan Pty Ltd (2013) 247 CLR 613, 634 [43] (French CJ, Hayne and Kiefel JJ, Bell and Gageler JJ dissenting in the result) noted that conceptually causation is "largely a question of fact, to be approached by applying common sense to the facts of the particular case". Their Honours continued (references omitted): [C]ourts are no longer as constrained as they once were to find a single cause for a consequence and to adopt an "effective cause" formula. Courts today usually recognise that there may be wrongdoers whose acts or omissions occur successively, rather than simultaneously, and who may be liable for the same damage, even though one may be liable for only part of the damage for which the other is liable. The law's recognition that concurrent and successive tortious acts may each be a cause of a plaintiff's loss or damage is reflected in the proposition that a plaintiff must establish that his or her loss or damage is "caused or materially contributed to" by a defendant's wrongful conduct. The relevant inquiry is whether the particular contravention was a cause, in the sense that it materially contributed to the loss. Material contribution has been said to require only that the act or omission of a wrongdoer play some part in contributing to the loss. 166 In Hunt & Hunt their Honours were discussing causation in the context of damages in tort but the same principle applies to the assessment of damages in contract: Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd (1998) 192 CLR 603, 616 [34] (McHugh J). 167 Once (or if) a causal link is established between the occurrence of a breach of duty and the loss or damage complained of, attention then turns to whether that loss or damage "was at the time of the contract reasonably foreseeable as liable to result from the breach": Burns v MAN Automotive (Aust) Pty Ltd (1986) 161 CLR 653, 672-673 (Brennan J). In the present context, the question to be answered is whether Mr Joseph (or a person in his position) reasonably contemplated at the time he entered into his contract with Parnell US that, in the event that he misconducted himself contrary to duties he owed under that contract, Parnell US might be exposed to the prospect of loss or damage arising from claims it might reasonably seek to compromise. 168 In Unity Insurance McHugh J observed at 615 [33]: Whether a settlement was within the contemplation of a defendant or a reasonable person in its position must depend upon the nature of the contract between the plaintiff and the defendant, their actual imputed knowledge of the consequences of a breach, and the nature of the third party's claim against the plaintiff. As a general rule, a contract breaker must be taken to have reasonably contemplated that its breach may force the innocent party into litigation with third parties and that the innocent party may conclude that it is in its best interest to compromise the third party's claim. But it does not follow that the fact that it was reasonable for the plaintiff to compromise the claim against the third party necessarily means that the settlement was within the reasonable contemplation of the defendant. That is so even in those cases where the defendant's breach was proved to be causally connected with the settlement. Each case must depend upon its own facts. 169 Later (at 625 [60]), Gummow J spoke of whether or not a compromise reached between a plaintiff and a third party "was, at the time of the contract between [the plaintiff and the contract breaker], within their reasonable contemplation or 'on the cards' as a 'serious possibility' or a 'not unlikely result' of [the contract breaker's] breach of the contract with [the plaintiff]." 170 It falls to a plaintiff (here, the cross-claimant) to establish the reasonableness of an amount paid in settlement of litigation arising from a defendant's (or cross-respondent's) breach of duty. In the usual course, the reasonableness of a compromise will turn on the risks involved in the litigation and the reasoning that led to its settlement: Unity Insurance, 616 [35] (McHugh J). A compromise will not be thought unreasonable simply because it might have been open to the plaintiff to secure a more beneficial outcome: Banco de Portugal v Waterlow & Sons Ltd [1932] AC 452, 506 (Lord Macmillan), cited with approval in Unity Insurance, 617 [36] (McHugh), 638 [97] (Kirby J). 171 In Unity Insurance at 653 [129]–[132], Hayne J made the following observations regarding the manner in which a plaintiff might prove that a settlement was reasonable: 129 Whether the compromise of a claim was reasonable must be judged objectively, not subjectively. Thus whether a party to litigation has received advice to settle may be important in deciding whether that person's conduct in settling the case was reasonable but, standing alone, the fact that a litigant was advised to settle at a particular figure reveals little or nothing about whether the settlement reached was reasonable. This is not to say that evidence may not be led that such advice was given and adopted; it may. But evidence of that kind does not conclude the issue. What will usually be much more important is the reasoning that supported the advice that was given for that will ordinarily reveal why it was thought reasonable to compromise the claim as it was. 130 Next, the question whether the settlement was reasonable must be judged by reference to the material the parties had available to them at the time the compromise was reached. It is not to be judged according to whether material which was obtained later shows that the opposite party could or could not have prosecuted or defended the claim successfully but according to the assessment which could properly be made at the time of settlement of the chances of success or failure. 131 Often that will require consideration of whether the party that later seeks to say that the settlement was reasonable had made sufficient inquiries and had sufficient information available to it to warrant reaching a compromise. In turn that may invite attention to whether the cost of seeking further information would outweigh the benefit that it was reasonable to expect may be obtained from doing so, but it does not assume knowledge of the opposite party's brief to counsel. 132 All of these, and no doubt other, considerations may bear upon the question whether the settlement arrived at was reasonable. And it is inevitable that there will be no single answer to the question "for what amount was it reasonable to compromise this claim" - there will be a range of answers. What is a reasonable compromise of the claim will almost always require consideration of the chances of the parties succeeding in their respective claims or defences and that prediction of likely outcomes must always be imperfect and imprecise … 172 In Protec Pacific Pty Ltd v Steuler Services GmbH & Co KG [2014] VSCA 338 at [756], the Victorian Court of Appeal (Tate, Santamaria and Kyrou JJA) spoke of the need to make: … an objective assessment of the legal reasonableness of a settlement amount based on the circumstances prevailing at the time that the settlement was agreed. Legal reasonableness depends on the legal merits of the claim by A against B — that is, A's prospects of success against B — in terms of both liability and quantum. Legal reasonableness may coincide with commercial reasonableness but the two are not necessarily coextensive. 173 Their Honours later returned to the topic, observing at [818]: While many factors are relevant to the question of whether a settlement amount is legally reasonable, one factor is fundamental and must always be present. That factor is that the settlement amount is informed by an assessment of the relevant party's potential legal liability to the other party on the pleadings that were current and the evidence that was known at the time of the settlement … [A] settlement between A and B for an amount which is commercially attractive but is not based on the legal merits of their cases cannot constitute a reasonable settlement amount for the purpose of determining issues of causation, remoteness and quantum in a proceeding brought by B against C which seeks to impose on C liability for the settlement amount. 174 An amount paid in settlement of litigation might be considered reasonable even if the evidence led of the circumstances in which it was reached is limited: BNP Paribas, [250] (Giles JA, with whom, on this point, Sheller JA agreed). 175 Having identified the guiding principles, we turn to their application in the present case. Question one: Did the primary judge err in his findings concerning the settlement of the Lindsey assault proceeding? 176 The primary judge substantially accepted the central factual proposition upon which the Lindsey assault proceeding rested. His Honour also accepted that, by stabbing Ms Lindsey with a used syringe, Mr Joseph had acted in breach of duties he owed to Parnell US. 177 It could not reasonably be doubted — and, on appeal, Mr Joseph did not dispute — that the Lindsey assault proceeding arose because of conduct in which he engaged in breach of duties that he owed to Parnell US. On any view, stabbing a co-worker with a used syringe is conduct that offends the elemental duties by which any employee is contractually (and, in some cases, otherwise) bound. That disposes of the question raised about the primary judge's finding on causation. 178 The remaining question is whether it was reasonable or, more accurately having regard to the onus of proof, unreasonable for Parnell US to compromise the Lindsey assault proceeding in the way that it did. 179 The following points of principle apply: (1) the burden of establishing that the amount paid to Ms Lindsey in settlement of the Lindsey assault proceeding was reasonable falls (and fell) upon Parnell US; (2) reasonableness, in that context, is to be judged objectively and on the basis of information that was available to Parnell US at the time that it entered into that settlement; and (3) evidence of advice given to Parnell US, both by its lawyers and by the mediator whose proposal ultimately led to the settlement, is (and was) admissible but not conclusive. 180 Mr Joseph contends that the settlement was not reasonable (or, at any event, that Parnell US did not prove that it was reasonable) because: (1) Parnell US was not a party to the Lindsey assault proceeding; (2) what evidence there was of the reasoning that underpinned the settlement was insufficient to reveal why it was agreed to (and, by extension, why it was reasonable to agree to it); and (3) the settlement was effected contrary to his wishes. 181 The first of those considerations can be put to one side. It is of no moment that Parnell US was not a party to the Lindsey assault proceeding. The question is whether, at the time that Mr Joseph entered into his contract with Parnell US, it was within the parties' reasonable contemplation that Parnell US would pay a reasonable amount to settle a suit commenced by an employee or former employee against its chief executive officer as a consequence of conduct in which he engaged in breach of duties that he owed as such. 182 With respect, the primary judge was correct to conclude that it was. Parnell US, as Mr Joseph's employer (and Ms Lindsey's former employer), had an obvious interest in the outcome of the Lindsey assault proceeding. That interest arose in at least two respects. First, it arose simply because Mr Joseph was its chief executive officer and Ms Lindsey was formerly a senior employee. Second and perhaps more significantly, it arose by reason of constitutional protections that were afforded to Mr Joseph as the chief executive of the Parnell group of companies. Clause 27 of Parnell Holdings' constitution indemnified Mr Joseph in respect of liabilities that he incurred to third parties (as well as related legal costs) as a result of conduct in which he engaged in his capacity as an executive officer (see primary judgment at [173]). Had the Lindsey assault proceeding gone to trial and resulted in an award of damages against Mr Joseph, Mr Joseph would likely have been at liberty to enforce that indemnity against Parnell US. 183 The real issue on the appeal is whether or not the amount that Parnell US paid in settlement of the Lindsey assault proceeding was unreasonable. In deciding that it was reasonable, the primary judge referred (at [155]) to the fact that the amount was one proposed by Mr Daugherty, who was "…an experienced Circuit Court Judge who had had substantial experience as a mediator". 184 On their face there was nothing unreasonable about the mediator's opinions. In addition to the views of the mediator, the evidence included the advice that Parnell US had received from its lawyers: (1) on 5 December 2017, concerning the amount that Ms Lindsey might be awarded in the event that the Lindsey assault proceeding progressed to trial (see above, [35]); (2) on 14 February 2018 — after Mr Daugherty proposed the terms upon which (or upon a relevant analogue of which) the two Lindsey proceedings were ultimately resolved — in which it was said that Mr Daugherty's offer "merits serious consideration" and was "our best pathway for resolution at this point in time" (see above, [37]); and (3) on 19 February 2018, when Shook, Hardy and Bacon elaborated upon why they took the view that Mr Daugherty's "offer" should be accepted (see above, [39]). 185 It might be recalled that Mr Joseph was himself involved in internal Parnell discussions about whether or not to accept the mediator "offer" that Mr Daugherty proposed for settlement of the two Lindsey proceedings. Not only that, but he also indicated that he was in favour of settling them largely on the basis that Mr Daugherty had identified, albeit that he wanted to incorporate within the final settlement terms some additional protection against the prospect that Parnell US might seek (as it did) to recover from him the amount that was paid to Ms Lindsey (protection, as history records, that he was not afforded). 186 The primary judge was, with respect, correct to conclude that the amount that Parnell US paid in settlement of the Lindsey assault proceeding was reasonable (and, therefore, recoverable as the foreseeable consequence of Mr Joseph's breaches of duty). The basis upon which Parnell US took the view that the matter should settle on the terms that it did is apparent from the written advice it received. That advice — quite properly, if we might say — involved an assessment of the prospect that Ms Lindsey's account of the syringe incident would be accepted, as it was in these proceedings. That was a potential reality that threatened to expose Parnell US to liability far greater than the amount for which it settled, to say nothing of associated reputational damage. The amount that was paid was within the range of what appears, on the strength of the advice that was given, to be what was necessary to avoid those undesirable eventualities. 187 The fact that the settlement was effected without Mr Joseph's approval (or even over his objection) is of no moment, although we pause to note, again, that he appears to have given such approval, albeit conditioned upon additional indulgences to which Parnell US did not accede. 188 It follows that appeal grounds 13 to 17 are not made out. Question two: Did the primary judge err in his findings concerning the settlement of the Tymeson discrimination proceeding? 189 As the factual summary outlined earlier identifies, the primary judge also accepted that Mr Joseph's conduct toward Ms Tymeson was conduct in which he engaged in contravention of duties he owed to Parnell US. His Honour accepted that that conduct materially animated Ms Tymeson's decision to start her discrimination proceeding against Parnell US, that the settlement terms into which Parnell US and Ms Tymeson entered in compromise of that suit were reasonable, and that, consequently, Parnell US was able to recover as damages from Mr Joseph the amount that was paid pursuant to those terms. 190 It is not necessary to repeat the points of legal principle that guide our analysis of the correctness of his Honour's conclusions (see above, [175]). Mr Joseph maintained that the payment of the sum by Parnell US to Ms Tymeson in settlement of her proceeding was not caused by any breach of duty on his part. Instead, he argued, the Tymeson proceeding advanced multiple complaints, only some of which were connected to his conduct. Additionally, he maintained that, on the evidence before the primary judge, it was not properly open to his Honour to conclude that the amount paid was reasonable. 191 As to the issue of causation — namely, whether the requisite causal link between Mr Joseph's conduct and the institution of Ms Tymeson's proceeding was established — there can be no real doubt. It is to be recalled that Mr Joseph was named as a defendant to that action. In the petition by which Ms Tymeson commenced it, his conduct (described as "extreme and outrageous" and "negligent") featured prominently in the instances of conduct upon which Ms Tymeson based her allegations. In particular, Ms Tymeson made express reference to the gala dinner incident "joke" and to her subsequent dismissal from the business, to which Mr Joseph materially (if not principally or solely) contributed. That there were other factors to which Ms Tymeson referred (and which, undoubtedly, also animated her decision to commence the proceeding) is beside the point. Mr Joseph's misconduct was a material cause and his contention to the contrary is unsustainable. 192 Mr Joseph's more substantive complaint is that it was not open on the evidence before the primary judge to conclude that the amount that Parnell US paid to settle the Tymeson proceeding was reasonable. Mr Joseph maintains that the rationale offered by Mr Daugherty in support of settlement was nearly identical to that which he had earlier offered with respect to Ms Lindsey's actions. In the absence of any other evidence disclosing a reasonable rationale for settlement on the terms that were accepted, Mr Joseph maintains that Parnell US failed to establish that the sum that it paid was reasonable. 193 Mr Joseph's contention cannot be accepted. 194 It is to be recalled that Parnell US had received advice from its solicitors that Ms Tymeson could potentially recover damages for lost earnings, compensatory damages for emotional harm of between $50,000 and $150,000, a "meaningful award of punitive damages", and attorney's fees of between $250,000 and $300,000 (see above, [33]). Additionally, Parnell US stood to spend somewhere in the range of $225,000 to $275,000 in "defense expense through trial". 195 More focused advice was provided upon receipt of Mr Daugherty's "blind mediator proposal" (above, [44]). That advice identified why it was that the company's lawyer's "best judgement" was that Mr Daugherty's offer was a "good settlement in this case". Amongst other things, that advice referred to "the lax procedures" that apparently endured during "the Joseph era", the principal consequence of which was that there was "no documentation (other than [Mr Joseph's] after-the-fact letter) to prove that the elimination of Tymeson's position had already been decided by the time that she complained of sexual harassment". That reality was said to be "very problematic". The narrative upon which Parnell US relied in its defence — that the decision to dismiss Ms Tymeson pre-dated the complaints that she made — was said to be one that "'rings hollow' without any documentation to support it". 196 It is not difficult to understand why that advice was given. Parnell US laboured under an obvious risk that Ms Tymeson's claims against Parnell US would be believed. That is particularly so with respect to the circumstances of her dismissal. Parnell US would inevitably struggle to displace the logical inference arising from the timing of Mr Joseph's campaign to have her removed from her position. The situation was not improved by the fact that a key witness in Parnell US's defence would inevitably have been Mr Joseph himself, who, by that stage, had been summarily dismissed from his employment and had commenced legal proceedings of his own. 197 Given the evidence, we do not accept that Parnell US failed to establish that its settlement of the Tymeson proceeding was reasonable. To the contrary, in all the circumstances it was eminently reasonable for Parnell US to settle the Tymeson proceeding in the manner that it did. The primary judge did not err in so deciding. 198 It follows that appeal grounds 18 to 22 are not made out. Question three: Did the primary judge err in his findings concerning the settlement of the Lindsey discrimination proceeding? 199 By their cross-appeal, the respondents contend that the primary judge erred in concluding (at [154]) that Mr Joseph's conduct did not materially contribute to the institution (and settlement) of the Lindsey discrimination proceeding. For the reasons that follow, we agree that that conclusion was reached in error. 200 It should be recalled that the Lindsey discrimination proceeding, much like the Tymeson proceeding, focused upon multiple incidents, not all of which harked back to conduct in which Mr Joseph engaged in breach of duties he owed to Parnell US. That reality acknowledged, it is nonetheless plain on the evidence that Mr Joseph's conduct, in particular his telling of the lewd "joke" constituting the gala dinner incident and his conduct during the stabbing incident materially contributed to the institution by Ms Lindsey of the action and the decision of Parnell US to compromise the action as it did. 201 In her letter of resignation Ms Lindsey nominated the assault with the used syringe as one of the factors which prompted her resignation (above, [27]). She described the stabbing incident as "criminal behaviour", which was "both shocking and frightening". 202 In an affidavit she affirmed on 9 November 2018, Ms Lindsey deposed at length to the stabbing incident, stating in particular: My thigh immediately began stinging at the site [at which the syringe had entered it]. I was shocked, speechless and scared. My first thoughts were about the fact the needle Mr Joseph had used to stab me had just been used to inject my dog, whether there are any communicable diseases between dogs and humans, and whether any of them are deadly. I thought about my three children. I desperately wanted to get out of Mr Joseph's office. After a few seconds I got up and left with Yogi. 203 Later, Ms Lindsey deposed to having undergone "appropriate blood tests…to check that there had been no adverse, longer term physical health consequences from having been stabbed with a needle containing residual amounts of an experimental drug". 204 As to the gala dinner incident, in the same affidavit Ms Lindsey deposed: I was disgusted by Mr Joseph's joke. I thought it was sexist, crude and offensive. On the night of the Gala event, during the hours after Mr Joseph told his "joke", several female employees came up to me either crying or very upset by Mr Joseph's offensive joke. On January 28, 2016, the day following the Gala event at the Hawaii conference, I was scheduled to go to Mr Joseph's hotel room for a one hour meeting so that I could be provided with my formal employment performance review and discuss my review with Mr Joseph. … At the scheduled time, which I recall being in the late afternoon, I went to Mr Joseph's hotel room for my performance review. Mr Joseph and I spent about the first 55 minutes of the hour allocated to discussing my performance review talking instead about Mr Joseph's behaviour at the event the previous night. I recall that I told Mr Joseph that his behaviour was inappropriate and unbecoming of a CEO. 205 On any view, those two incidents — the stabbing incident and the gala dinner incident — had a deleterious impact on Ms Lindsey, as one might reasonably expect. 206 Ms Lindsey's letter of resignation made clear beyond doubt that Mr Joseph's behaviour towards her and the stabbing incident in particular weighed heavily on her mind. In her affidavit she explained the reasons for, and circumstances in which, she decided to take legal action: When I resigned from Parnell US I had not decided to commence legal action against Mr Joseph or against Parnell. However, in the week following my resignation I had many discussions with my husband about taking action, be that legal action or otherwise. It weighed on my mind that Mr Joseph's assault on me with a needle was apparently not an isolated incident, but rather part of a pattern of behavior on his part. It also weighed on my mind that Mr Joseph would presumably continue to abuse and bully those who remained at Parnell. Ultimately, I decided that while I was scared to death of being involved in litigation, I should bring a claim, in part because I did not believe that Mr Joseph should be allowed to continue to lead a company. 207 Some attempt was made during Ms Lindsey's cross-examination to attribute her decision to litigate to her having not been paid various entitlements upon the termination of her employment. It is fair to say that that did not manifest in any suggestion that Mr Joseph's conduct was immaterial to that decision. 208 Perhaps the best evidence of the significance of Mr Joseph's conduct to Ms Lindsey's initiation of the Lindsey discrimination proceeding (and the decision by Parnell US to settle it) lies in the particulars of the "Complaint" that was filed. That document (and the subsequent, amended version of it) expressly mentioned both the stabbing incident and the gala dinner incident. The primary judge described these mentions as "passing reference[s]" but, with respect, that erroneously diminishes their significance. On any view, the Lindsey discrimination proceeding sought to make an issue of those examples of Mr Joseph's conduct. That conduct was much more than peripheral to her claim; it was an essential component of it. 209 It follows that his Honour erred in concluding that the USD70,000.00 that Parnell US paid in settlement of the Lindsey discrimination proceeding was not a material cause of the breaches by Mr Joseph of the duties he owed to Parnell US. It very much was, albeit together with various other matters. 210 That leaves for determination whether the settlement by Parnell US of the Lindsey discrimination proceeding was reasonable. For reasons equivalent to those advanced in respect of the other two US proceedings, Mr Joseph maintained that "[t]here is no proper basis to conclude that the settlement of [the Lindsey discrimination proceeding] was reasonable in order for the [r]espondents to prove their losses against the [a]ppellant." 211 Again, we are unable to agree. As we have already noted (above, [34]–[42]), the settlement of the two proceedings brought by Ms Lindsey was the subject of extensive discussion between Mr Joseph, Parnell US, and their attorneys, Shook, Hardy and Bacon. The basis upon which Parnell US resolved those proceedings (and it is to be recalled that they were resolved together) is apparent from those communications. Our comments about the reasonableness of the amount paid by Parnell US in settlement of the Lindsey assault proceeding (above, [180]-[184]) apply equally to the amount it paid in settlement of the Lindsey discrimination proceeding. 212 It follows that grounds 2 and 3 of the respondents' cross-appeal must be allowed. Setting off the judgments (cross-appeal grounds 4 and 5)? 213 By ground 4 of the cross-appeal, the respondents contend that the primary judge erred by opting not to give judgment in a single net amount. For the reasons that follow that contention should be accepted. 214 Although there is no obligation to set off one judgment or order for the payment of a sum of money against another, it has long been the practice of common law courts to do so: Rory Derham, Derham on The Law of Set-Off (Oxford University Press, 4th ed, 2010) at 51 [2.98]. Both sides accepted that his Honour had a discretion in this regard: see, for example, Derham at 53 [2.101]. The discretion is often described as "an inherent discretionary power": see, for example, Miller v Director of Public Prosecutions (No 2) [2004] NSWCA 249 at [23] (Young CJ in Eq). It is more accurate, however, at least in most Australian courts, including this Court, to describe it as an implied or incidental power: Parsons v Martin (1984) 5 FCR 235 at 240–241 (Bowen CJ, Northrop and Toohey JJ) and DJL v Central Authority (2000) 201 CLR 226 at [25]. The respondents contended that the discretion miscarried. 215 The discretion at play is broad; a court may take into account "a variety of factors including the public interest, the efficient administration of justice, and the conduct of the parties": Miller, [13] (Beazley JA). 216 In the present case, if the respondents are to successfully impugn the primary judge's exercise of discretion not to grant judgment in net terms, they need to show that the discretion miscarried in one or more of the ways discussed by the High Court in House v R (1936) 55 CLR 499 at 505. 217 The reasons for judgment disclose (at least to an extent) why it was that his Honour opted not to order judgment in a net amount. His Honour stated: 129 Any entitlement to a set off is to be resolved by reference to s 324(1)(d) of the Fair Work Act. That section provides in relevant part as follows: An employer may deduct an amount from an amount payable to an employee in accordance with subsection 323(1) if: … (d) the deduction is authorised by … an order of a court. Section 323(1) provides as follows: An employer must pay an employee amounts payable to the employee in relation to the performance of work: (a) in full (except as provided by section 324); and (b) in money by one, or a combination, of the methods referred to in subsection (2); and (c) at least monthly. Note 1: This subsection is a civil remedy provision (see Part 4-1). Note 2: Amounts referred to in this subsection include the following if they become payable during a relevant period: (a) incentive-based payments and bonuses; (b) loadings; (c) monetary allowances; (d) overtime or penalty rates; (e) leave payments. 130 Assuming that there has been a contravention of the Fair Work Act and assuming further that s 324 permitted the Court to make an order that the payment of outstanding entitlements payable to Mr Joseph could be deducted from any amount payable by him by reason of damages awarded against him pursuant to the Amended Cross-Claim, such an order would be refused in the exercise of the Court's discretion. Mr Joseph's entitlements that may be enforced pursuant to the Fair Work Act, it is respectfully considered, should be resolved in the circumstances of the present case separately and distinctly from any entitlement on the part of his employer for damages for breach of contract. 218 Respectfully, his Honour's observations sit uneasily with the course to which his orders ultimately gave effect. As has already been addressed, his Honour did not find that there had been any contravention of the FW Act. Initially, he did not identify which of the corporate respondents was liable for Mr Joseph's unpaid annual and long service leave accruals. Ultimately, he made orders visiting liability for those amounts upon Parnell US. For obvious reasons, the FW Act had no application to that respondent and was never said to have had any. 219 It follows, then, that the amounts payable to Mr Joseph were not amounts in respect of the payment of which the FW Act had any application. Respectfully, whether or not a procedural order setting one amount off against the other was appropriate to reduce those amounts (effectively to nought) so as to take account of Ms Joseph's own liability for damages was not a question that fell to be "…resolved by reference to s 324(1)(d) of the Fair Work Act", as his Honour resolved. Section 324(1)(d) of the FW Act was irrelevant. 220 For this reason, his Honour's discretion to award judgment in a net sum miscarried. In determining whether to exercise it, his Honour took account of an irrelevant consideration. Having so concluded, it falls to the Court as presently constituted to re-exercise that discretion. 221 In our view, it is appropriate to set off the amounts payable to and by Mr Joseph. It is unnecessarily burdensome to the parties to require the making of two payments when one will plainly suffice to give effect to the Court's judgment. That is particularly so in circumstances where Mr Joseph, who will bear the burden of paying the balance of the competing judgment sums, does not live in Australia. 222 Having come to this conclusion, it is unnecessary to address the respondents' alternative contention, the subject of ground 5 of the cross-appeal, namely, that "an equitable set-off arises". It suffices to say that we would allow ground 4 of the cross-appeal and that ground 5 does not arise. Conclusion 223 The orders made by the primary judge should be set aside. The appeal has succeeded in part and the cross-appeal has been wholly successful. There will be orders accordingly. Any party wishing to apply for costs should file and serve a submission within 14 days. Any response should be filed and served within 7 days later. Any submission in reply should be filed and served within 7 days thereafter. No submission may exceed three pages without the leave of the Court. I certify that the preceding two hundred and twenty-three (223) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Logan, Katzmann and Snaden. Associate: Dated: 11 May 2021 SCHEDULE OF PARTIES NSD 764 of 2020 Respondents Fourth Respondent: ALAN BELL Cross-Appellants Second Cross-Appellant: PARNELL PHARMACEUTICALS HOLDINGS LTD (ACN 137 904 413) Third Cross-Appellant: PARNELL CORPORATE SERVICES U.S. INC. Fourth Cross-Appellant: ALAN BELL First Cross-Claimant: PARNELL CORPORATE SERVICES PTY LTD (ACN 138 251 617) Second Cross-Claimant: PARNELL PHARMACEUTICALS HOLDINGS LTD (ACN 137 904 413) Third Cross-Claimant: PARNELL CORPORATE SERVICES U.S. INC.