CATCHWORDS TERMINATION OF EMPLOYMENT - Claim of dismissal in breach of industrial award proscribing "harsh, unjust or unreasonable" dismissal - Claim for damages - No application for imposition of penalty - Ground of dismissal was alleged serious misconduct in improperly disclosing confidential information - Whether the disclosure amounted to serious misconduct - Availability of damages. DEFAMATION - Document alleging serious misconduct published to applicant in circumstances where he was thereby placed under an obligation of disclosure to prospective future employers - Publication protected by qualified privilege - Whether publishers were affected by malice. WAYNE GOOLEY v. WESTPAC BANKING CORPORATION No. NI.102 of 1994 CORAM: WILCOX CJ PLACE: SYDNEY DATE: 3 APRIL 1995 IN THE INDUSTRIAL RELATIONS COURT ) OF AUSTRALIA ) No. NI.102 of 1994 NEW SOUTH WALES DISTRICT REGISTRY ) BETWEEN: WAYNE GOOLEY Applicant AND: WESTPAC BANKING CORPORATION Respondent CORAM: WILCOX CJ PLACE: SYDNEY DATE: 3 APRIL 1995 MINUTES OF ORDER THE COURT ORDERS THAT: 1. The matter be stood over for mention on Friday, 1 December 1995 at 9.30am unless finalised sooner. 2. Each party have liberty to apply for final orders on seven days notice to the other. NB: Settlement and entry of orders is dealt with in Order 36 of the Industrial Relations Court Rules. IN THE INDUSTRIAL RELATIONS COURT ) OF AUSTRALIA ) No. NI.102 of 1994 NEW SOUTH WALES DISTRICT REGISTRY ) BETWEEN: WAYNE GOOLEY Applicant AND: WESTPAC BANKING CORPORATION Respondent CORAM: WILCOX CJ PLACE: SYDNEY DATE: 3 APRIL 1995 REASONS FOR JUDGMENT WILCOX CJ: This is a claim for damages by Wayne Gooley against his former employer, Westpac Banking Corporation ("Westpac"). The proceeding The proceeding has undergone metamorphosis over time. It was commenced in the Industrial Division of the Federal Court of Australia on 31 December 1992. The Federal Court then had jurisdiction in industrial matters. The applicant filed an Application in which he sought a declaration that his dismissal by the respondent on 24 July 1992 was "harsh, unjust or unreasonable" within the meaning of Appendix C of the Bank Officials (Federal) (1963) Award ("the Award"), a declaration that the dismissal was in breach of the terms of an agreement dated 14 January 1991 between himself and the respondent, damages and interest. The applicant also filed a Statement of Claim in which he alleged that the bank was bound by the Award in respect of employment of bank officers, including himself, and that it was a term and condition of his employment, implied by law from the Award, that termination of his employment would not be harsh, unjust or unreasonable. He referred to clause 37 of Appendix C of the Award which, relevantly, read: "(a) Termination of employment by the Bank shall not be harsh, unjust or unreasonable. For the purposes of this sub-clause, termination of employment shall include terminations with or without notice." The applicant also claimed that it was a term of his employment contract that his employment would not be terminated by the respondent other than by four weeks' notice in writing or payment of four weeks' salary in lieu of notice. Although the Statement of Claim did not mention the alleged source of this term, it appears that the applicant relied on para. (d)(i) of clause 37 of the Award which requires four weeks' notice except where otherwise agreed in writing between the bank and the affected person. By his Statement of Claim the applicant alleged that he was dismissed on 24 July 1992 without notice, under circumstances that made the dismissal harsh, unjust or unreasonable. He claimed this was a breach by Westpac of his contract of employment. It is important to note that the applicant did not ask the Court to impose a penalty on Westpac, in respect of its alleged award breach: see s.178 of the Industrial Relations Act 1988. Presumably because of this, and in order to overcome any jurisdictional problem about the Federal Court entertaining a purely contractual claim, the applicant prayed in aid s.4 of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW). During the period that the parties were preparing for trial, counsel for the applicant applied to amend the Statement of Claim so as to add a claim of defamation. Counsel for the respondent objected to this, pointing out that s.347 of the Industrial Relations Act precludes the making of a costs order "in a matter arising under this Act" except against a party who institutes a proceeding vexatiously or without reasonable cause. Counsel submitted that joinder of a defamation claim might have the effect of extending the length of the hearing and increasing its cost; and s.347 might prevent his client recovering the extra expense, even if it successfully resisted the defamation claim. This submission made a number of assumptions, but it seemed to me that it was possible for the postulated situation to occur. Unless suitable steps were taken in advance, it could prove unfair to have allowed the applicant to litigate his defamation claim in a proceeding based on an award made under the Industrial Relations Act. At the same time, it was obviously undesirable to compel the applicant to institute a second proceeding, in another court, in order to litigate a second cause of action that arose (so I was assured) out of the same facts. Accordingly, I suggested that the problem be met by the applicant tendering an appropriate undertaking. This suggestion was accepted. On 5 November 1993 counsel proffered an undertaking in these terms: "I, WAYNE ANTHONY JOHN GOOLEY, ... undertake to the Court to pay to the Respondent in those proceedings such amount as the Court thinks reasonable by way of compensation to the Respondent in respect of the legal costs incurred by it in the event that I am unsuccessful in relation to the amended component of the Application and Statement of Claim, being that part which relates to defamation proceedings only. I understand that, pursuant to certain provisions of the Industrial Relations Act, the respondent would not be entitled to the payment of any of its costs even if it were completely successful in defending my claim against it for defamation (except in the circumstances specified in that Act) I further understand that this undertaking relates only to costs incurred by the Respondent which are attributable solely to the defence of the defamation proceedings and will in any event not relate to any costs incurred prior to 21 September 1993." I accepted the undertaking and gave leave to amend. Counsel for the applicant then filed in Court an amended Statement of Claim that retained the allegations previously made but added a claim that, on or about 24 July 1992, the respondent published of and concerning the applicant the matter set out in a file note dated 24 July 1992. This note referred to "the results of the investigation conducted by the Bank's Group Investigations unit". It stated: "Mr Gooley was advised that the Bank had concluded that Mr Gooley's actions in passing on confidential information concerning the Bank's relationship with clients to Mr Ken Davidson, a Director of Newbank Property Advisory Services, was in clear breach of the Declaration of Secrecy signed by Mr Gooley on 14 January 1991 and constituted a dismissible offence in terms of the Westpac Code of Conduct." The note recorded that the applicant was asked if he had anything to say in regard to the matter and that he made three observations in response: "that the investigation process was appalling and that he believed that the decision to suspend him was made prior to the completion of his final statement"; that "the document which is the subject of this investigation was in his view clearly not confidential"; and that he believed the investigation process damaged his reputation. The file note stated that his comments "did not alter the Bank's view of his actions and the decision to be reached". Accordingly, he "was given notice of the termination of his employment with the Bank, effective immediately". The amended Statement of Claim did not allege that officers of the bank published the file note to any third party, as would ordinarily be necessary to ground a defamation action. But it claimed that it was a natural and probable consequence of the publication of the file note to the applicant that he would repeat the substance of the matter (and, in particular, the stated reason for his dismissal) to prospective employers and, indeed, was under social, moral and legal obligations to do so; that he did so and thereby sustained damage. The amended Statement of Claim then referred to a typewritten minute circulated to other employees of the bank on about 27 July 1992 reading: "Wayne Gooley was dismissed last Friday on a Code of Conduct issue". He pleaded certain defamatory imputations and alleged damage. On 7 February 1994, whilst preparations for the hearing were still continuing, a Full Court of the Federal Court handed down judgment in Byrne v Australian Airlines Limited (1994) 47 FCR 300. By a 3-2 majority (Keely, Beaumont and Heerey JJ, Black CJ and Gray J dissenting) the Court overruled previous decisions of the Court, including that of a three-member Full Court in Gregory v Philip Morris Ltd (1988) 80 ALR 455, by holding that damages are not recoverable by an employee for dismissal in contravention of an industrial award. The majority held that the provisions of an award governing the terms of an employee's employment are not imported into, or implied in, a contract of employment between an employer and employee and that no entitlement to damages arises out of a breach of the obligations imposed by an award. As the alleged breach of the Award was a major foundation for Mr Gooley's claim for damages, Byrne understandably caused the applicant's advisers some indecision; especially, perhaps, when it became known that an application had been made to the High Court of Australia for special leave to appeal the Full Court decision but the application would not be heard for some months. However, counsel eventually indicated that his client wished to proceed to a hearing of this case, without awaiting the outcome of the application for special leave. A June hearing date was fixed. It is possible that Mr Gooley's wish to proceed immediately was influenced by the fact that, on 30 March 1994, consequentially upon the commencement on that day of the Industrial Relations Reform Act 1993, the proceeding was transferred from the Federal Court to this Court: see s.64 of the Reform Act. Subsequently, counsel submitted to me that, sitting in the Industrial Relations Court, I should not regard myself as bound by, or follow, the majority decision in Byrne. On 3 May 1994 the respondent filed a Notice of Motion seeking vacation of the June hearing and that the matter stand over until after consideration of the Byrne special leave application. I refused this application. I considered that, if Mr Gooley wished to proceed to an immediate hearing notwithstanding the burden of the Federal Court decision in Byrne, he should be permitted to do so. In the event, the evidence was taken over four days in June 1994. At the conclusion of the evidence, it was agreed that counsel's submissions should be put into writing and a time-table was agreed. There were some unforeseen delays and the final written submissions, of the applicant in reply, were not received until late December. In the meantime, on 8 August 1994, the High Court granted special leave to appeal in Byrne. The appeal has not yet been heard. The applicant's employment by the respondent Mr Gooley is a qualified lawyer. He was admitted as a solicitor of the Supreme Court of New South Wales, but, I gather, has never practised as such. He has made his career in the financial world, an environment where legal knowledge is a significant advantage. In October 1989 Mr Gooley took employment with Bill Acceptance Corporation Limited ("BAC"), a Westpac subsidiary. Towards the end of 1990, Westpac decided to disband BAC and Mr Gooley was offered a position with Westpac itself. The position was described in a letter dated 17 December 1990 as "Manager, Corporate Banking Division attached to Project & Advisory Services". The letter proposed the appointment be effective from 29 January 1991. A schedule of conditions of employment was enclosed. Mr Gooley responded to this letter on 15 January. He confirmed his telephone acceptance of the appointment and returned several executed documents. They included a schedule setting out details of his salary package, which came to $98,583 per year. Additionally, he had the benefit of stipulated concessional home and investment lending rates. In his letter of acceptance Mr Gooley referred to an agreement that his salary package would be reviewed in January 1992. He mentioned: "that no firm or formal description has been given of my duties upon transfer into the Project and Advisory Services Division apart from the fact that I will be engaged in debt restructuring and possible mergers and acquisitions (the later (sic) not being a priority at this moment)". Mr Gooley's salary package was increased in January 1992 to $100,000 per year. Although Mr Gooley commenced with Westpac in January 1991, it was not until the following October or November that a detailed statement of his work objectives was agreed. By then his section had been renamed "Corporate Advisory Services". The eventually formulated objectives included: "To market P & A's services internally to existing clients, and to non-Westpac customers including other professional advisers (i.e. stockbrokers, lawyers, accountants etc) with a view to identifying opportunities and to specifically promote Corporate Advisory Services". In January 1992, Corporate Advisory Services was disbanded. Mr Gooley was assigned to a similar section in the Corporate Finance Division called "Consulting and Advisory Services". The section was led by Peter Fletcher. Mr Gooley's work objectives were varied. His "mission" was stated "(t)o be a pre-eminent supplier of corporate advice both within Westpac and to the external market". His "prime function" was to be "(t)he marketing and delivery of corporate advice both externally and technical advice internally". The specified "client group" included "Selected non-IBG clients (public and private sector)". The acronym "IBG" refers to "Institutional Banking Group", a section within Westpac. So the specified clients were to include selected people outside Westpac. The evidence contains details of work undertaken by Mr Gooley for such people, and memoranda passing between himself and Mr Fletcher in connection therewith. While he was employed in Consulting and Advisory Services, Mr Gooley furnished some information to a friend named Kenneth Davidson. Mr Gooley had worked with Mr Davidson at BAC, until Mr Davidson left in January 1991 to establish his own company, Newbank Property Services Limited. This disclosure is the "serious misconduct" for which he was dismissed. I will return to the nature of the information and the circumstances of its disclosure. It seems that Mr Gooley's first intimation of trouble came in a conversation on 25 June 1992 when a fellow officer repeated to him a claim by a third bank officer "that you were an employee of Newbank or something". Mr Gooley said in evidence that he replied this was ridiculous and thought no more about it. On the following Monday, 29 June, however, Mr Gooley was telephoned by Paul O'Neill, the bank's Manager of Investigations. Mr O'Neill asked Mr Gooley to see him. When Mr Gooley arrived at the nominated office, Mr O'Neill told him he was "conducting an investigation with respect to certain matters and affairs in which you have been involved with a company by the name of Newbank". Mr O'Neill said he wanted Mr Gooley "to accompany me over the road for an interview". Mr Gooley said this was inconvenient as he needed to clear up some matters urgently, but Mr O'Neill insisted that the interview commence immediately. He did not give Mr Gooley any further information concerning the subject of the interview or the nature of the accusations made against him. However, Mr Gooley said in evidence that, during the course of the investigation he - "gained the impression that the two issues which were concerning the Investigator were the general disclosure of supposedly confidential information, not only to Newbank but to other advisors namely, legal and accounting firms and the possibility that I may in some undefined way be beneficially associated with Newbank." Mr O'Neill's interview with Mr Gooley lasted for over seven hours, on three consecutive days. Mr O'Neill served in the New South Wales Police Force for 12 years. So it is perhaps not surprising that he followed the procedure usually adopted by police officers interrogating criminal suspects. A verbatim record was made of his questions and directions and Mr Gooley's responses. At the end, Mr Gooley was invited to sign the record of interview, as an indication of its accuracy. Because he felt aggrieved about the way he had been treated, he declined to do so. But it has not been suggested during the course of this case that the record is inaccurate. The record of interview reveals that the interrogation commenced at 2.58pm on 29 June when Mr O'Neill said he was making inquiries "in relation to your involvement with a company by the name of Newbank Property Services Limited during the period in which you have been employed with Consulting and Advisory Services". After some background questions, Mr O'Neill asked Mr Gooley what was his association with Newbank. Mr Gooley replied: "I am not a Director, employee, or consultant, and have not in any way shape or form received any benefit or pecuniary interest from the abovementioned company. I hold a share in trust for Mr Ken Davidson but other than that I have absolutely (sic; presumably add "nothing to do") with the abovementioned company." He told Mr O'Neill the names of the directors of the company, Mr Davidson, Mr Peter Beaumont "and possibly Mr Michael Beath". He said he knew them all at BAC, though he had known Mr Davidson since the early 1980's when Mr Davidson was at Partnership Pacific Ltd (another Westpac subsidiary) and Mr Gooley at the Australian Stock Exchange. Mr O'Neill asked numerous questions about Newbank's activities and Mr Gooley's involvement with them. Mr Gooley claimed that his only involvement, apart from holding the share on trust, was to discuss business opportunities, this being done on behalf of the Corporate Finance Division of the bank. The opening session of the interrogation lasted almost three hours, terminating at 5.47pm. Mr O'Neill resumed the interview at 9.20am the next day and continued until 12.05pm when he broke to allow the record of interview to be printed. A copy of the record of interview was then made available to Mr Gooley. On the following day, Wednesday 1 July, the interview resumed at 2.45pm. After answering some questions, Mr Gooley made a statement dealing with matters raised by Mr O'Neill during the interrogation on the previous two days. This resulted in further questioning, finally completed at 4.20pm. Immediately after completion of the interview, and without leaving the room or telephoning anyone, Mr O'Neill informed Mr Gooley that he was suspended from duty on full pay pending a decision by senior management about the investigation. Mr O'Neill required Mr Gooley immediately to hand to him his security mill key and card. Mr Gooley protested about this, and asked Mr O'Neill the reason. He received no explanation. Mr Gooley then asked whose decision it was to suspend him. Mr O'Neill mentioned Mr Fletcher. Mr Gooley pointed out that the decision must have been made without knowledge of his statement and answers that afternoon but Mr O'Neill insisted on delivery of the mill key and card. He did, however, allow Mr Gooley to return to his office to pick up his personal belongings. Mr Gooley consulted a solicitor, John Rollason, who wrote a letter dated 9 July 1992 to the respondent's then Managing Director, Frank Conroy. Mr Rollason asked Mr Conroy to intervene personally in the case. Mr Conroy did not respond. On 24 July Mr Gooley and Mr Rollason attended a meeting with Ron Thomsen, head of the Corporate Finance Division, Neville Pearsall, Chief Manager of Human Resources in IBG and Warren Leaming, Manager of Westpac's Legal Division. Mr Pearsall announced that the purpose of the meeting was to review the outcome of the investigation conducted by the bank, to allow Mr Gooley to put forward any materials by way of response and to determine what course should be taken by the bank. In referring to the investigation, Mr Pearsall mentioned a letter dated 19 March 1992 sent by Mr Gooley to Mr Davidson under cover of which he had provided certain information. The letter read: "Dear Ken New Business Structure - Limited Partnerships ("LP") in New South Wales As discussed, I now give you a brief run down of LP's. Limited partnerships will be able to be formed in New South Wales pursuant to the Partnership (Limited Partnership) Amendment Act 1991 ("Act"), which is expected to commence sometime this month. It is well known that every partner in a partnership is jointly and severally liable for all partnership liabilities. That rule does not apply to "limited partners" in a "limited partnership". They enjoy limited liability. The laws of some other jurisdictions in Australia have allowed LP's, however, the feedback is that they are antiquated and uncertain in operation. Limited partnerships formed under the Act will have features which will make them the most suitable business vehicle in some situations, especially for ventures which are expected to make losses in their early years, or perhaps negatively geared property development and certain tax shelter arrangements. I would like to discuss this with you once you have had the chance to review the enclosed documents. Rather than repeat the provisions in their entirety I enclose some summaries I obtained on LP's. Further I enclose financing unit trust deals as discussed." The first enclosure consisted of a two page extract from a solicitor's letter dealing with the nature of a limited partnership and referring briefly to the tax and prospectus position of a limited partnership. This was accompanied by two pages from a printed document dealing with limited partnerships. It is not suggested that any of this material was confidential. Then followed three printed sheets bearing the identification "Consulting Services - Research Projects". The document was headed "Unit Trust Deals". They were pages 3, 4 and 5 of a lengthier document. The relevant sheets were headed "Financing Unit Trust Deals". This was identified as "Project No. 7". Under the heading was a "Strategy", stated in these terms: "(I) We are aware that many of these deals are in trouble - either sponsor or project related - for one reason or another, making them good candidates for restructure. (II) We may be able to find a buyer for one or more for those that no longer suit the Bank's tax profile (ie the ones that are still tax negative)" The stated priority of these actions was "A and B (refer each Unit Trust)"; that is, either top priority or second top priority depending on whether a letter "A" or "B" appeared in the list in respect of a particular unit trust. The list set out short particulars of ten unit trusts. Each trust concerned a commercial property. In each case the location was mentioned but, in most cases, in such general language that further particulars would have been required in order to identify the particular property. In most cases the date of signing the trust deed was stated, as was the stipulated termination date. In most cases the value of the bank's equity was indicated. In some cases there were comments such as "tax positive" or "tax negative". Two of the ten trusts were given priority "A", the remainder "B". At the meeting on 24 July Mr Pearsall expressed the opinion that the information in this document was confidential and that its disclosure constituted serious misconduct which was a dismissible offence. Mr Gooley disputed the confidentiality of the information but Mr Pearsall said that the bank had advice to that effect. Mr Gooley was invited to consult privately with Mr Rollason. After doing so, Mr Gooley made a statement in which he criticised the investigation process and repeated his assertion that the information was not confidential. He said he had at all times acted conscientiously and in the interests of the bank. Mr Gooley and Mr Rollason were asked to leave the room. They were recalled some 15 minutes later and handed a file note signed by Mr Thomsen and Mr Pearsall summarising the meeting. This document contained the paragraph, quoted above, upon which Mr Gooley bases his defamation claim. It concluded in this way: "After consideration of Mr Gooley's comments he was advised that they did not alter the Bank's view of his actions and the decision to be reached. Accordingly, Mr Gooley was given notice of the termination of his employment with the Bank, effective immediately." Mr Gooley was invited to sign the document but refused. "Serious misconduct" The major factual issue in the case is whether Mr Gooley was guilty of "serious misconduct" justifying his dismissal. It is not in dispute that Mr Gooley sent to Mr Davidson the letter of 19 March 1992, mentioned above, with its enclosures. Consistently with the approach taken by Mr Thomsen and Mr Pearsall, who made the decision to dismiss Mr Gooley, counsel for Westpac argued that the three page document headed "Financing Unit Trust Deals" contained confidential information or, alternatively, was itself a confidential document; so, without more, Mr Gooley's transmission of the document to Mr Davidson constituted serious misconduct warranting dismissal. Counsel for Mr Gooley disputed the claimed confidentiality, but also said that the bank's case necessarily involved a second issue: if the document contained confidential information or was itself confidential, whether Mr Gooley knew or ought to have known that fact. It seems to me that counsel is correct about that. The question whether Mr Gooley was guilty of serious misconduct requires an examination, not only of his actions, but also his mental processes relative to them. Although, as I will demonstrate, he had difficulty in understanding the implications of his concession, Mr Pearsall conceded as much when he said in evidence that he used the phrase "serious misconduct" in his letter of 24 July 1992 to mean "conduct which was in itself of a nature which caused a fundamental breakdown in the relationship as an employer to an employee". This meaning is consistent with what fell from Smithers and Evatt JJ in North v Television Corporation Ltd (1976) 11 ALR 599. The question in that case was whether the respondent breached an award in summarily dismissing an employee. The award required payment in lieu of notice except where the dismissal was for refusal of duty, wilful and serious neglect of duty, disobedience of instructions or orders or misconduct. At 608-609 their Honours said: "It is of assistance to consider the expression 'misconduct' by reference to subject matter to which it is related and the context in which it appears. The subject matter is the termination by one party against the will of another of a continuing contract of employment on the ground of breach of one of the terms of the contract. And the context is such as to indicate that certain breaches of a non-serious nature, some of which would be within the connotation of misconduct, are not regarded as grounds for termination. In such a situation it is reasonable to interpret the expression 'misconduct' as referring to conduct so seriously in breach of the contract that by standards of fairness and justice the employer should not be bound to continue the employment. This situation would arise if there were conduct inconsistent with the fulfilment of the express or implied conditions of service. It is conduct of that kind which will justify dismissal at common law. ... For purposes of the application of the common law principles to the facts of this case, the remarks of the Master of the Rolls in Laws v London Chronicle (Indicator Newspapers) Ltd [1959] 2 All ER 285 at 287 and 289, are in point. He said:- 'To my mind the proper conclusion to be drawn from the passages which I have cited and the cases to which we were referred is that, since a contract of service is but an example of contracts in general, so that the general law of contract will be applicable, it follows that, if summary dismissal is claimed to be justifiable, the question must be whether the conduct complained of is such as to show the servant to have disregarded the essential conditions of the contract of service. ... 'I do, however, think (following the passages which I have already cited) that one act of disobedience or misconduct can justify dismissal only if it is of a nature which goes to show (in effect) that the servant is repudiating the contract, or one of its essential conditions; and for that reason, therefore, I think that one finds in the passages which I have read that the disobedience must at least have the quality that it is 'wilful'; it does (in other words) connote a deliberate flouting of the essential contractual conditions." The nature of the disclosed information It is clear that the three page document was confidential, in the sense that it had never been made public. In the words of Lord Greene MR in Saltman Engineering Co Ltd v Campbell Engineering Co Ltd [1964] 3 All ER 413 at 415 it was not "something which is public property and public knowledge". But was it confidential in the sense used in the relevant passage in Westpac's Code of Conduct, as alleged by the bank? That passage reads: "The principle of 'confidentiality' underlies all functions of the Group's activities, and employees should treat the business affairs of Westpac, its customers and fellow employees, with absolute secrecy. This principle applies equally to ex-employees in relation to confidential information acquired during employment with Westpac." Obviously, the principle referred to in this passage is not violated by an employee passing to an outsider a document already in the public domain or intended for public information; for example, a sales brochure or schedule of foreign exchange trading rates. Equally obviously, the converse is not true. The principle of confidentiality is not contravened simply because the relevant document is still within the private arena; that is, it is not "public property and public knowledge". For example, a Westpac employee does not breach the principle by communicating with a customer about that customer's own affairs or by revealing information about Westpac's business affairs to a Westpac adviser or pursuant to a legal obligation. Another example is where it is necessary for the employee to disclose information about Westpac's financial affairs in order to progress negotiations with an outsider for a transaction believed to benefit Westpac. In order to determine whether or not an employee has breached the principle of confidentiality mentioned in the Code of Conduct, it is necessary to consider, not only the nature of the disclosed information, but also the circumstances of its disclosure. Both counsel read affidavits made by people with experience in the financial world dealing with the nature of the information in the three page document. For example, on the applicant's side, Maxim Carling, a person with over 15 years experience in merchant banking, commercial banking and corporate financial management, said in an affidavit that he did not: "regard the information provided by the Applicant as confidential as any corporate finance adviser is always dealing in information and there is no basis for discussion unless some information between the parties is exchanged. Furthermore, no adverse consequences could have resulted in forwarding the information to Mr Davidson and the Respondent's position could only have been enhanced if a transaction were to proceed." Cross-examined about this statement, Mr Carling said that, in his experience, much of the information in the document "would be readily obtainable in public documents". In particular, he mentioned the information in the document about the termination dates of the trusts: "... having been involved in many transactions over many years, when usually financiers in such large transactions as those were, they like to blow their own trumpets and there are announcements and things in the paper that say the transaction was completed on such and such a date and it was a five year facility, then one can conclude that 5 years from when they blow their trumpet that is when the facility matures." Mr Carling thought there was no particular advantage in a potential investor knowing the termination date of a trust before opening negotiations concerning its restructure or refinancing. Keith Taylor, a person with seven years experience in merchant banking (including six years as Manager, Corporate Advisory Services of BAC), and service in both the Regulation Division of the Australian Securities Commission and the private corporate sector, deposed that, in his position with Westpac, the applicant had: "an ongoing responsibility to generate new business for the Respondent and assist in any way possible to decrease its problem areas. With such a responsibility the forwarding of the letter to Newbank, a company specialising in property advisory matters, trying to achieve a beneficial transaction for the Respondent, is a perfectly legitimate work practice." Mr Taylor expressed the opinion that the information in the document: "could not be regarded as being confidential as it contains limited financial information and in most cases does not reveal the location of the properties involved. It also provides no details of what the bank or client will accept for the property or their interest in it. In addition, merely stating tax negative/positive would, in my opinion, be insufficient information for an investor to form any worthwhile opinion. Factors such as the incidence of cash outflows/inflows, current valuations of the security provided, identities of the sponsors, credit approval of the sponsors, banking history, tenant identities and agreements are not disclosed and would have had to have been provided by the Respondent for any deal to have proceeded. Also the deal may not have continued in the existing trust structure at all, it depends upon a number of variables not the least being the extent of the changed circumstances the Respondent and the sponsors found themselves in from the time of initially entering into the deal. It is to be noted that the level of tax losses has not been disclosed." Mr Taylor concluded that - "(g)iven that Newbank specialises in property related matters and that the Respondent wanted action on the subject properties, I can see no harm to the Respondent in the Applicant's actions which I consider he has done in the course of his duties as a corporate adviser and in fact the Respondents position would only have been enhanced if any transaction were to proceed." Asked in cross-examination whether potential investors would be interested in the termination date, Mr Taylor replied: "They may well be, but it may well be or so be incidental. A lot of these arrangements were by put and call arrangements where whereby either party could terminate the arrangement under specified circumstances. The redemption date or termination date may merely indicate the length of time the transaction had a maximum to proceed to. It may be irrelevant." Mr Taylor said that, if Westpac was the "packager, arranger and manager" of a particular unit trust transaction, as apparently was the case in respect of these ten trusts, the information would not be of benefit to another arranger or financier; such a person "would have to deal" with Westpac. Graeme Richardson, a person who spent over 13 years with Westpac and its merchant bank subsidiaries, expressed the opinion that the information in the document - "would not, in my opinion, have provided the recipient with the capacity to take any steps on its own account without gaining further details from Westpac and involving Westpac in any further activity. The information contained was no more than would be required as an absolute minimum by any party even contemplating the purchase of an interest and much of the information would have already been known to interested participants in the property or banking industry, particularly Mr Ken Davidson who, to my knowledge, was well aware of at least several of the transactions on this list because he was working at Partnership Pacific Limited when they were written." Mr Richardson said that, having regard to Mr Gooley's position in Westpac, it was "not inappropriate" for him to respond to the contact from Newbank by supplying the information. He said: "The information supplied by the Applicant could not, in my opinion be put to any commercial use for the benefit of the recipient without the full co-operation and participation of Westpac. The information supplied by the Applicant does not in my opinion, reveal any information on Westpac's own financial or tax status, which could in any way be regarded as of detriment of the Bank. I do not believe that there is any other information included in the information supplied which could be regarded as detrimental to the Bank or its customers or clients." During cross-examination, Mr Richardson said that he did not regard the termination date of the unit trusts as confidential information. He thought something that is confidential - "is something that is proprietary to the bank or an organisation and that if disclosed, has a possible adverse impact either economically or to the reputation of the bank and I don't believe that any of this information meets that category." Richard Lowe had been employed in the Corporate Advisory Services Division of BAC and, later, Westpac. He had worked with Mr Gooley and done much the same work. Mr Lowe said that the information in the document - "is of the type that would either be known to participants in the property industry, or is such as only to establish whether there is mutual interest in pursuing more detailed discussions. Establishing whether mutuality exists by provision of such information is a common practice in the business area in which the Applicant was involved." A number of other people, several of them ex-employees of Westpac and/or one or more of its merchant bank subsidiaries, gave evidence to similar effect to that summarised above. I need not refer to them in detail. The Westpac witnesses who gave evidence the other way included the three people who were concerned in the decision to dismiss: Messrs Pearsall, Leaming and Thomsen. The first two men expressly treated the fact that the information was not publicly available, or perhaps not readily available, as establishing that it was "confidential" in the sense of the Code of Conduct. In an affidavit, Mr Pearsall said that the letter to Mr Davidson - "encloses details of unit trusts and details of the Respondent's intentions in relation to those trusts. It also provides details regarding the tax position. It is not documentation which is readily available any where else in the market." Mr Leaming said: "Based on the information provided to me it is my opinion that parts of the information disclosed by the applicant to Mr Davidson were not publicly available and were confidential to the respondent. The disclosure of this information was a breach of the applicant's duty of confidentiality, as recorded in his Declaration of Secrecy, and in my opinion constituted adequate grounds for dismissal." Mr Thomsen deposed to a "belief that the document divulged by the applicant was confidential". He said that this belief was based on his review of Mr O'Neill's report and a discussion he had with Mr Fletcher before the commencement of Mr O'Neill's interrogation of Mr Gooley. Mr Thomsen did not disclose the particular information on which he based his belief or his process of reasoning. Evidence was also given by Dean Hawkins, the compiler of a 31 page document of which the subject three pages were part. Mr Hawkins was at the time a Senior Manager in the Consultancy and Advisory Services Group. He said he prepared the document from material already known to him or provided by other Westpac personnel. He said: "The purpose behind the preparation of the Document was to create a complete list of possible transactions or restructurings which the Group could investigate to determine their viability. Generating further work or new ideas and consequently further fee income for the Division was the number one priority of the Group." Mr Hawkins expressed the opinion "that the information regarding the ten unit trust deals was confidential to the respondent". By way of explanation, he made three comments: "(a) The signing date was often public information. Specifically, when a deal was completed it is conceivable that the respondent would have published a tombstone in a publication such as 'The Australian Financial Review' which would advertise the completion of the deal; (b) In some cases, to my knowledge, such a tombstone would not include the equity input by the respondent, rather, it would publish the total project cost. (c) Any publicly available information would not include details of the taxation status of the deal. Anyone having knowledge of the change in the taxation structure of a deal would certainly have a springboard towards negotiating with the principals." In the course of his oral evidence, Mr Hawkins expounded on the significance of the information in the document. In regard to information about the taxation status of the unit trusts he said: "The transactions on that list were ones which were entered into by the bank with a number of different clients and they involved essentially some tax efficient financing as opposed to an ordinary loan. During the life of the transactions, the nature of the deal would change in that the income received by the bank, whether it was Westpac or another investor, would change from tax negative to tax positive and that meant that there was essentially a trigger date during the life of the deal where there was a potential for restructuring it if the documents allowed it, essentially, that there was potential we could find ways to introduce a new investor." He said some other organisation, that was involved in giving financial advice concerning property transactions, could use the tax status information: "Of itself it is not the complete answer but it provides someone with an opening with client names, some details of the transaction, some timing details, which just provides more credibility to someone if they then go and essentially knock on the door of the client. They then have a credible entry to the client and some basis on which to start doing any restructuring." Mr Hawkins said that any restructuring arrangement would involve Westpac being paid the money owing to it, but it might be eliminated from future participation. He conceded this could happen anyway if the other parties to the transaction "shopped about" for the best terms. In relation to that matter, it was put to him that, given the amount of money involved in any of these transactions, the borrower would "shop around amongst all of the major banks in Australia and perhaps many overseas banks". He responded: "Yes, absolutely. I mean they all have relationships with more than one bank and they will be seeking offers." Mr Hawkins agreed that, having regard to the large sums of money involved, a saving as little as one-tenth of one percent per annum would amount to a significant sum. His evidence went on: "So I just do not understand the argument that this exposes Westpac to competition and renewal because you are going to get it anyway, are not you?---I don't believe it is an issue of competition, it's an issue of information. Well where is the prejudice to Westpac then in this information going to Newbank?---A competitor like Newbank would have access to information well before termination date to prepare any new structures and to prepare the basis on which they go to any of these clients and obviously seem very credible and very well informed when they approach whom ever the client is and seek to try and take those as a client away from Westpac. Yes but that means just simply that Newbank approaches Merlin for example rather than Merlin approach Newbank and/or the Commonwealth Bank, the Citibank, you name it, correct?---I have no doubt that Newbank would approach Merlin on these deals. But would not Merlin approach anybody they could think of in sufficient time to do whatever restructuring was required before May 1992?---Yes, it is just more difficult for other banks if they are going to restructure it from a cold start if you like." Merlin was one of the borrowers named on the schedule. Particularly having regard to this evidence, I am unpersuaded that Mr Gooley's action prejudiced or compromised Westpac in any way. All the witnesses who dealt with the matter agreed that none of the unit trusts could be restructured or terminated during their appointed lifetime without Westpac's participation. At termination a question would arise about the future financing of the loan. Westpac might then be eliminated from participation. However, whether or not this occurred would depend upon the availability, and cost, of alternative finance. Once it is accepted, as commonsense dictates and Mr Hawkins conceded, that any party requiring to refinance a facility worth hundreds of millions of dollars would inquire widely amongst Westpac's competitors, it is apparent that Westpac's future participation will be determined by competitive factors, not whether some particular person has advance knowledge of the termination date. Accordingly, although the three-page document was "confidential" in the Saltman Engineering sense, in that it had not been publicly released, the information it contained was not such that its public release would be likely to damage Westpac. Mr Gooley's motivation From the time when he was first asked about the matter by Mr O'Neill, Mr Gooley has insisted that his action was taken in pursuit of Westpac's interests. Using the words in para.(i) of the Strategy at the commencement of the list, he said that it was a list of unit trusts that were mostly "in trouble", that were "good candidates for restructure". He said that para. (ii) spoke of finding a buyer for those that were still tax negative; Newbank was active in the property investment field and might be able to introduce a buyer or person interested in participating in a restructure of one or more of the units. Mr Gooley said he sent the list to Mr Davidson as a convenient way of conveying some basic information about trusts in respect of which he might like to make proposals. If the disclosure to Mr Davidson of the information in the document would have been likely to prejudice or disadvantage Westpac, it would be difficult to accept Mr Gooley's assertions about his motive. After all, Mr Gooley was experienced in this area and would have been likely to discern such prejudice or disadvantage. Although it might still be possible to regard the action as a mere error of judgment, there would be much to be said for the proposition, argued by counsel for the respondent, that Mr Gooley disloyally decided to prefer the interests of his friend to those of his employer. However, once the conclusion is reached that the disclosure of the information in the document would not have been likely to damage Westpac, the content of the document not only provides no basis for doubting Mr Gooley's assertions as to his motive; it tends to support him. There are other reasons for accepting Mr Gooley in relation to motive. In his evidence before me, Mr Gooley repeated the story he had given Mr O'Neill. I thought that, in doing so, Mr Gooley was speaking the truth. He was extensively cross-examined about his motive but left unshaken. Moreover, his evidence accords with other evidence, not in contest. First, it is clear from the duty statement documents quoted above that Mr Gooley was expected to engage in marketing; he was to promote his section's services amongst selected non-bank clients. Any sale or restructure of a unit trust would involve work for his section, leading to fee income for the bank. In order to stimulate the interest of another party in a sale or restructure, it was necessary to give some information about what was available. Second, Mr Gooley made no attempt to conceal the fact that he had sent the document to Mr Davidson. The letter of 19 April was typed on his word-processor. Its text was accessible to several other people in the section. If Mr Gooley had had an improper motive, he would surely have attempted to conceal his action. He could have sent the document to Mr Davidson without a covering letter, or with a letter not retained on his word-processor. Third, there was nothing in the document itself to indicate that the information it contained was to be limited to bank employees. It was not marked "confidential" or otherwise restricted. It was readily available to all employees in the section. I agree this would not matter if the information in the document was clearly intended to be kept confidential. It is not necessary for a bank to mark its customers' bank statements as confidential because every employee knows that the information they contain is intended to be restricted to the customer and relevant bank officers. But the information in this document was not clearly intended to be kept confidential; on the contrary, the document opened with a note about finding a buyer for those units that no longer suited the bank's tax profile. I agree with counsel for the applicant that this note contained an invitation to relevant Westpac employees to initiate the disposition of trusts included in the list, a process that would require disclosure of some, at least, of the stated information. For the above reasons, I am satisfied that Mr Gooley's motive in sending the information to Mr Davidson was that claimed by him, an attempt to stimulate proposals by Newbank in connection with the unit trusts and thereby advance the interests of the bank. It is apparent from his evidence that, notwithstanding his own definition of "serious misconduct", Mr Pearsall thought Mr Gooley's motive was irrelevant. I have already quoted the reasoning expressed in his affidavit. In oral evidence he expanded on this. Mr Pearsall rejected counsel's suggestion that "serious misconduct depends on whether the conduct was done willingly or unwillingly". He did not agree that a mental element was inherent in his concept that "serious misconduct" is "conduct that causes a fundamental breakdown in the employer/employee relationship". Exploring this, I put to him a couple of hypothetical cases. The first supposed an employee to whom a car was issued by his employer, with the right to drive it home. The car was damaged in an accident, through the employee's fault. Mr Pearsall said he would not regard the employee's negligence as serious misconduct. I then changed the facts to make the damage intentional, because the employee was aggrieved about his treatment at work. I asked whether he would regard that as serious misconduct. The evidence went on: "If we were aware of this stated intention, yes. And the difference being that in the one case he intended to damage the bank's property and in the other case he did not, although he might have been negligent about what he did?---That's right, yes. In that case I would agree. All right. Now, let me take you to another hypothetical example. In a particular bank branch there are two customers with the same or a very similar name. I take it is axiomatic that a bank officer is supposed to keep confidential documents including bank statements relating to a particular customer?-----That's correct. That is right. So that is confidential information on anybody's view of the matter. Now, in a particular branch an officer of the bank being asked for information confuses the two customers and sends out information about the wrong customer. Let us suppose it would not have been a breach of confidence if the officer had sent the information about the correct customer. Are you with me?---Yes. The wrong customer's information goes out to somebody who had no business to receive it. That causes embarrassment, even perhaps loss to the customer. The customer is upset, complains, and so on, and it is unpleasant for the branch manager. Right?---Yes. But it was all an accident, although a negligent accident. Serious misconduct?---No. No. Now, let us assume the same facts but that the officer knowing that the two names were there but not liking the customer, used this as an excuse to deliberately send the information about the other customer. The same results. Serious misconduct?---Yes. Mr Pearsall was then directed to Mr Gooley's position: "Let us assume Mr Gooley genuinely, though mistakenly, thinks that the information that he had was information which he was perfectly entitled to send to Newbank in the interests of Westpac in the hope of drumming up some extra business for Westpac. Let us assume that that was a bad judgment but it was done in total good faith. Serious misconduct?---In terms of the nature of the position Mr Gooley holds I believe it was serious misconduct. Well, why was it serious misconduct then if it was a genuine mistake, whereas in the other examples it was not serious misconduct although negligent?---The fundamental difference is, I think, the position of trust and the position of inherent, I believe, in positions that Mr Gooley - like Mr Gooley holds within the bank in that sort of operation, they are positions of - where the judgment of the employee, as a representative of the bank and representative of the bank's clients, is a fundamental - is the core, their ability to exercise that judgment, is the core of the employment relationship. Yes, but in both the previous examples people were in a position of trust, the employee who was driving an expensive bank car, position of trust, right?---I think there is a degree of different between the custodianship of a vehicle, if you like, which is a bank asset, and the custodianship of bank clients at the level and the seniority that Mr Gooley was holding. But in each case they are matters of trust?---Yes, I accept that. And in each case there is the potential for damage to the bank through negligence, although not deliberate?---Yes. And I just have some difficulty in seeing why the mental element is relevant to the first two examples I gave you but not to the last. Would you say that again for me, why it is not relevant?---I suppose, let me clarify it, the mental element is relevant, when intention is involved - and I accept that. What I am saying is, in senior positions of the like Mr Gooley held in the organisation, and that part of the organisation dealing with corporate investors and the like, it's a fundamental part, the core of their employment relationship rests on their ability to exercise proper judgment under the bank's guidelines in terms of confidentiality of both the bank's business and our client's business." Mr Pearsall went on to say, in relation to Mr Gooley, that "all that was being disputed was the fact whether it was confidential or not" and that "once I accepted the judgment of the bank people who were in a position to advise me that a breach had occurred, then I believe that constituted serious misconduct". He said that, at the time, "I was unsure of Mr Gooley's state of mind". The position taken by Mr Pearsall, in the evidence just quoted, was repeated by counsel for the respondent in his submissions: "The applicant has demonstrated that he could not make a reliable judgment as to whether information was confidential to Westpac. Westpac could not be expected to trust such an employee not to make serious errors of judgment in the future. In all these circumstances the termination of Mr Gooley's employment was not harsh, unjust or unreasonable." As I have already indicated, I do not think that Mr Gooley did demonstrate that he could not make a reliable judgment as to whether information was confidential to Westpac. On the contrary, his judgment on that matter is supported by numerous well-qualified witnesses. But, even if he had made an unsound judgment, this would not justify his dismissal on the ground of serious misconduct. It might be reasonable for an employer to give notice of dismissal to an employee who demonstrates an inability to make sound judgments about an important aspect of his or her position. No employer is required to carry indefinitely an employee who lacks capacity for the job. But it is another matter to dismiss that employee summarily for "serious misconduct". Such a dismissal is likely to be traumatic and damaging to the employee. It brands the employee as someone who has committed an act of gross disloyalty, if not dishonesty. It is not an appropriate way of disposing of an employee who has acted conscientiously and honestly, though with poor judgment. The other person who participated in the dismissal decision, Mr Thomsen, also acted on the basis that Mr Gooley's motive was irrelevant. I have already referred to his affidavit evidence. Under cross-examination he said that he did not at the time consider whether or not Mr Gooley was sincere in his protestations that the document was not confidential. This is curious, since Mr Thomsen agreed that it would be more serious for an employee deliberately to breach his contract of employment than to do so non-deliberately, and that the words "serious misconduct" "carry with them a flavour of intentional wrongdoing". He agreed that "serious misconduct" could describe a theft of money, a deliberate fraud on Westpac or "a deliberate handing over of confidential information knowing it was confidential". The evidence went on: "They could not describe, however, a handing over of information not believing it was confidential, could they?---The differentiation in this case I don't understand, but I would go along with your question and say yes. No, I don't want you to answer anything you do not understand, Mr Thomsen. Let me postulate two situations. An employee, knowing that information he is handing over outside Westpac, goes ahead and does it - that is, knowing that it is confidential, and also knowing that it is a breach of his declaration of secrecy. That is one situation. On the other hand, an employee, wrongly but innocently, hands over information that is confidential but he does not believe it is confidential - you understand the contrast in the two situations?---I do, I understand. And it depends upon the belief in the mind of the employee, does it not?---Yes, and also his employer. It depends on his belief as to whether it is a deliberate or an innocent breach, does it not?---Yes. And one of them, the deliberate breach, is very much more serious than the innocent one, is it not?---Yes. In fact, the innocent one could not be described as serious misconduct, could it?---In the example, no." Two questions later Mr Thomsen reaffirmed that he did not address his mind to the question whether Mr Gooley was sincere in his denial that the information was confidential. In a non-responsive answer to the following question, Mr Thomsen said "I felt that he believed that it was confidential". But I reject this evidence; first, because it is at odds with his repeated statement that he did not consider that question at the time and secondly because, under further questioning, he was unable to advance any reason for that feeling. I think Mr Thomsen's assertion was an attempt to overcome what he had come to recognise as a fundamental omission in his reasoning process. It is apparent that neither Mr Pearsall nor Mr Thomsen considered all the matters that needed to be considered in determining whether Mr Gooley was guilty of serious misconduct. There was nothing before them to indicate that Mr Gooley was insincere in his assertion that the document was not confidential, whether or not he was correct about that. Had Mr Pearsall and Mr Thomsen considered the matter properly, I believe they would have concluded that Mr Gooley did not send the information to Mr Davidson knowing or believing that it was confidential; and that, at most, he was guilty of an error of judgment that could not properly be described as "serious misconduct". Whether or not I am right in that belief, on the evidence before me I am affirmatively satisfied that Mr Gooley was not guilty of serious misconduct. His dismissal on that ground was harsh, unjust and unreasonable within the meaning of the Award. In reaching that conclusion, I have not overlooked the evidence elicited from Mr Gooley in cross-examination about letters written by him on Westpac letterheads commending Newbank to various people. At the time they took the dismissal decision, Mr Pearsall and Mr Thomsen knew about these letters. Nonetheless, they did not refer to them in specifying the serious misconduct for which he was dismissed. Presumably they did not think Mr Gooley's actions in writing these letters was capable of being regarded as serious misconduct. I agree. Having regard to his friendship with Mr Davidson, Mr Gooley was unwise to write these letters without Mr Fletcher's prior approval. I also think it was disingenuous of him to tell Mr O'Neill it was "ridiculous" to suggest that the opinions expressed in the letters would be seen by their recipients as Westpac opinions. Of course they would have been so seen; that was the purpose of sending them. However, ill-advised or not, the sending of these letters was clearly not serious misconduct. It was treated as irrelevant by Mr Pearsall and Mr Thomsen, and rightly so. Procedural irregularity Counsel for the applicant submits that the investigation process that led to Mr Gooley's dismissal was unfair and unjust and that this provides an additional reason for characterising his dismissal as harsh, unjust and unreasonable. There is no doubt that a procedural irregularity, such as a denial of natural justice, may lead to a dismissal being harsh, unjust and unreasonable, even where there was a substantive justification for the dismissal. See Bostik (Australia) Pty Ltd v Gorgevski (No.1) (1992) 36 FCR 20 at 34 and the cases there cited and note this was the reason why all five members of the Byrne Full Court held that the termination of the appellants' employment contravened cl.11(a) of the award under which they were employed. The procedural irregularity in the present case, according to counsel for the applicant, was the failure of Mr Pearsall and Mr Thomsen to consider "the possibility that even if the information contained in the financing unit trust deals document were to some extent confidential, Mr Gooley genuinely but mistakenly believed it was not." He says that this omission meant that "Westpac never considered the possibility that Mr Gooley was acting bona fide." He goes on to say that Westpac never considered the effect on the decision to be made of a conclusion, if reached, that Mr Gooley was acting bona fide. Counsel also relies on a number of errors and omissions in Mr O'Neill's report of his investigation. As will be apparent from what I have said, I agree with counsel's criticisms of the reasoning process undertaken by Mr Pearsall and Mr Thomsen. I also agree with his criticisms of Mr O'Neill's report. But it does not follow that the decision was procedurally irregular. These were matters of substance, not procedure. I do not think Westpac breached the rules of natural justice. Although the allegation made against him was not stated in clear terms at the outset, Mr Gooley understood its nature before the completion of the interrogation. He was accorded the opportunity of making a statement in response and did so. The decision to suspend him seems to have been made by a person who had not heard or read his statement or his replies to all of Mr O'Neill's questions. But there is no reason to doubt the assertions of Mr Pearsall and Mr Thomsen that they read the transcript of the interrogation before deciding to dismiss. Although I do not think that the dismissal decision was rendered harsh, unjust or unreasonable because of lack of procedural fairness, I would not wish to be thought to approve the course taken by Westpac in this case. Mr Gooley was a professional person working with other professionals. He was answerable to a superior, Mr Fletcher, who was cognisant of the nature of the relevant document, its purpose and the circumstances surrounding its keeping and use. If there was a question about the propriety of an action taken by Mr Gooley in connection with that document, it would surely have been more appropriate for the matter to be raised with him, at least in the first instance, by Mr Fletcher. For Westpac officers to demand that Mr Gooley immediately abandon his work and submit to a lengthy police-like interrogation by a stranger, was unnecessarily humiliating and stressful; especially when there was no special urgency about the matter and the demand did not clearly specify the misconduct of which he was suspected. To strip him of his security card and mill key, immediately upon completion of the interrogation and before anybody in authority had the opportunity to consider his responses, seems oppressive. I am unable to see what harm to Westpac's interests would have ensued if the suspension decision had been delayed for a day or two while the situation was considered and if Mr Gooley had been given an opportunity to make a dignified departure from his office. I realise there is a current notion that dismissed employees should be immediately escorted from their employer's premises lest they commit an act of sabotage, for example to the employer's computer data. Whatever the basis for that concern in the case of dismissed employees, and I confess that I have always thought the fear fanciful except in unusual cases, it was most unlikely that Mr Gooley, who was at that stage merely suspended and anxious to keep his job, would have been so foolish as to commit an act that would have rendered his dismissal inevitable. The consequences of the award breach At any time over a number of years until February 1994 the consequence of my finding that Mr Gooley's dismissal was harsh, unjust and unreasonable, and therefore a breach of the award under which he was employed, would have been that I proceeded immediately to assess damages. The view that damages may be granted to an employee for a breach by an employer of an award under which he or she was employed was upheld by a three-member Full Federal Court in Gregory v Philip Morris (1988) 80 ALR 455, although there was a difference between the members of the Court regarding the basis of that view. The appellant in that case was employed under an award containing a provision (cl.6(vi)) that "(t)ermination of employment by an employer shall not be harsh, unjust or unreasonable". Jenkinson J held at 459 that this provision was not a term of the contract of employment between the parties but this did not preclude "the existence of a right in the appellant to damages for breach of the provision". He referred to Mallinson v Scottish Australian Investment Co Ltd (1920) 28 CLR 66 wherein the High Court of Australia held that two employees had rights of action in a District Court for the difference between the amount of wages paid to them under their contracts of employment and the amount payable under a relevant award. The Court at 72 held that the effect of relevant provisions of the Commonwealth Conciliation and Arbitration Act 1904 was that an employee had a "right" to receive from his employer wages at a rate not less than the minimum rate fixed by the award. The Court characterised this as a "right to receive from a designated person a liquidated sum of money" and went on to consider, and answer negatively, the question whether there was anything in the legislation forbidding recovery of the sum by action in a court of general jurisdiction. In the context of the present case, where the claim is for an award of damages rather than a liquidated sum, it is worth noting that the Court supported this conclusion by referring at 71 to a wide principle stated by Vaughan Williams LJ in Groves v Lord Wimborne (1898) 2 QB 402 at 415-416: "It cannot be doubted that, where a statute provides for the performance by certain persons of a particular duty, and someone belonging to a class of persons for whose benefit and protection the statute imposes the duty is injured by failure to perform it, prima facie, and, if there be nothing to the contrary, an action by the person so injured will lie against the person who has so failed to perform the duty." Vaughan Williams LJ went on to say that, where a remedy for non-performance of the duty was provided, it was necessary to consider whether the legislature intended that this remedy be the only available remedy, but the existence of the alternative was not conclusive. One relevant factor was whether the remedy provided was co-extensive with the right given by the Act. Jenkinson J also referred to something said by Windeyer J in The Queen v Gough; Ex parte Meat and Allied Trades Federation of Australia (1969) 122 CLR 237. That case raised the question whether the Commonwealth Conciliation and Arbitration Commission had power to insert in an interim award a clause forbidding an employer "harshly or unreasonably" to terminate the employment of an employee, or to refuse to re-engage or re-employ a person who had been employed by the employer in the preceding twelve months. The second paragraph of the clause said that, if any dispute arose under it, "the Commission may on the application of the Union order the reinstatement in employment or re-engagement or re-employment of any such employee". It was accepted by both the parties and the Court that the first paragraph of the clause would be valid, if it stood alone; but all members of the Court held that the second paragraph invalidated the clause as framed. Three Justices held that the Court purported to permit the Commission to exercise the judicial power of the Commonwealth. Inherent in that holding, of course, was the proposition that a claim for reinstatement is a claim to exercise a legal right; that is, the employee has a legal right not to be terminated harshly or unreasonably. This must be because the award itself conferred that right. None of the three Justices spelt out how this occurred, but all agreed it was so. At 241 Barwick CJ (with whom Walsh J agreed) described the determination of a dispute under the first paragraph of the clause as "the ascertainment and enforcement of existing rights". At 246 Windeyer J said that "the first paragraph of the clause would create new rights as between master and servant superimposed on the common law incidents of their relationship. It seems to me therefore that an action for wrongful dismissal or for a refusal of employment might be brought at common law by an employee based upon a non-compliance with the clause". After quoting this statement, Jenkinson J in Gregory at 460 went on: "The reference to wrongful dismissal, a rubric under contract law, suggests that any right conferred by arbitral award under the Act may be characterised in the terms Dixon J used in Amalgamated Collieries of WA Ltd v True (1938) 59 CLR 417 at 431: 'The right to payment of award wages is really a term imported by statute into the contract of employment, and imported independently of the intention of the parties. ... The distinction between express promise and obligation imputed by statute relates only to the juristic source of the obligation.'" His Honour went on to consider how an award prescription of wages could come to be imported into the contracts of employment of employees who were neither members of an organisation bound by the award nor otherwise parties to the dispute in settlement of which it was made. He concluded at 460-461: "I think that, in respect of the employee who is, as well as of the employee who is not, bound by the award, the concept of an imported term is metaphorical, and that the obligation to pay the award wages, although conditional upon the existence and, ordinarily, upon the performance of an employment contract, is not itself contractual." After analysing Mallinson, Jenkinson J concluded at 461: "Persons who are parties to employment contracts, whether employer or employee, and who become bound by an award made under the Act, fall within a class on whose members the Act evinces, in my opinion, the intention to confer the protection of legal enforceability of award provisions. A primary mode of such enforcement is the compensatory remedy of damages." The other judgment in Gregory was a joint judgment of Ryan J and myself. We upheld both bases of the appellant's claim to damages; that is, first, that the award provision imports a term into the contract independently of the intention of the parties and, second, that a term to that effect ought to be implied. In relation to the first basis we referred at 478-479 to both the cases discussed by Jenkinson J, Mallinson and Gough, but we said the award "imports" the award term into the contract because of the statement by Dixon J in True quoted by Jenkinson J. When we turned to the question of an implied term Ryan J and I applied the decision of the Judicial Committee of the Privy Council in BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 16 ALR 363; 52 ALJR 20. Gregory attracted academic comment: see the note by Pittard in 16 Australian Business Law Review at 394-398, Mitchell and Naughton, "Collective Agreements, Industrial Awards and the Contract of Employment" in vol.2 of 1989 Australian Journal of Labour Law at 252-274, Macken, McCarry and Sappideen "The Law of Employment" 3rd ed. 1990 at 502-503, McCallum, "A Modern Renaissance" in (1992) 14 Sydney Law Review 401 at 415-420 and Tolhurst, "Contractual Confusion and Industrial Illusion: A Contract Law Perspective on Awards, Collective Agreements and the Contract of Employment" (1992) 66 Australian Law Journal 705. The fullest discussion was that of Mitchell and Naughton. Their article explored a number of mechanisms by which the terms of a collective agreement might possibly be incorporated into individual contracts of employment: agency (a matter discussed by Gray J at first instance in Gregory: see 77 ALR 79 at 93-95), implied incorporation, importation by statute, implied agreement and terms implied by law. The learned authors criticised the view that an award imports a term into the contract of employment independently of the intention of the parties. They preferred a proposition advanced by a commentator writing immediately after True "that the contractual right to wages is totally distinct from the statutory. They are two separate rights. The effect of the award is not to become a term of the contract, but to create a distinct substantive right". Mitchell and Naughton went on to discuss issues arising from the importation by statute argument that, they said, Gregory did not address: the possibility of "contracting out" of the award provisions and the situation of non-union members. As to the first matter, the learned authors conceded that Ryan J and I referred in the context of the implied term argument to the award applying "subject to any express agreement as to terms more beneficial to Gregory". We did not address the matter in the context of the incorporation by statute argument, and neither did Jenkinson J, but it is trite law that awards prescribe minimum conditions. As Dixon J pointed out in True at 431: "Contracts of employment may, at any rate in theory, provide for wages in excess of the minimum rates which are at any given time prescribed by an award. They may provide for wages at those rates and for wages below those rates. In the first case, the full wages can be recovered only upon the express contract ... But, in the second and third cases, the award rates are recoverable upon the statute. In the second case, it may be that they are also recoverable upon the express promise. In that case, however, the same sum is due under the statute, and payment discharges that statutory obligation." In relation to the second perceived problem Mitchell and Naughton pointed out that, under the Industrial Relations Act, "an employee may only seek to recover a penalty for breach of an award [under s.178 of the Act] if he or she is a member of an organisation (that is, a union) which is affected by the breach" and may sue for wages, under s.179, only if "entitled" to be paid an amount under an award or order or "entitled to the benefit of the award". The learned authors extracted from these provisions a "general policy approach ... to exclude non-unionists from the enforcement and recovery processes under the Act". They did not explain how that policy would be frustrated by allowing recovery of damages in courts of general jurisdiction by an affected employee for breach of a statutory right or an implied term of the contract of employment, any more than the policy underlying the relevant industrial legislation created a problem for the employee in Mallinson or True. Anyway, s.178 and 179 of the Industrial Relations Act have both now been amended in such a way as to allow applications under those sections by any employee, union member or not: see para.(ca) of s.178(5) and the new s.179 substituted in 1992. Whatever the validity of the criticisms made of it, Gregory was applied in the Federal Court over a number of years. The reported cases include Wheeler v Philip Morris Limited (1989) 97 ALR 282 and Bostik, mentioned above. Many other cases were settled or disposed of in unreported judgments. Then came Byrne. At first instance, Hill J found that the dismissal of the applicants was not harsh, unjust or unreasonable and, accordingly, not a breach of cl.11(a) of the relevant award: see (1992) 45 IR 178. The Full Court unanimously reversed that finding but, as mentioned, split 3-2 on the question whether the applicants were entitled to damages. The leading majority judgment was that of Beaumont and Heerey JJ. In a section of their judgment headed "Importation independently of intent" (334-342) their Honours analysed True, Mallinson and Gough in order to demonstrate that each of the passages from those cases referred to in Gregory were obiter dicta. In relation to the quoted statement of Windeyer J, they observed at 337 that - "to speak of an award creating 'new rights ... superimposed on the common law incidents of [the] relationship' suggests those rights are of a different character from the contractual rights created by agreement of the parties." They went on to refer to Josephson v Walker (1914) 18 CLR 691 wherein the High Court held that an action could not be brought in the Supreme Court of New South Wales to recover money payable under an award, the right to recovery being conditioned on action being taken in an industrial court where a six-months time limit applied. They quoted a statement of Griffith CJ at 696 regarding the employer's statutory obligation to make payments in accordance with the award: "It is an obligation which does not depend upon the agreement of the parties at all. In the ordinary case of an award by arbitrators appointed by the parties the obligation created is one arising out of contract. It is founded upon the submission, by which the parties agree to be bound by the decision of the arbitrators. But in this case that which is called an award is of an entirely different character. The obligation created by it does not depend upon any agreement of the parties express or implied, and may arise without their knowledge. If by the award it is determined that journeymen plumbers shall receive not less than a certain rate of wages, each journeyman plumber is entitled to those wages, and, although the employer and the employee have gone on for a long time the one paying and the other receiving what each honestly believes to be the proper rate of wages, nevertheless if it is afterwards found that the wages paid are less than those fixed by the award, the right of the employee to receive the wages so fixed has accrued." They also referred to an observation of Isaacs J at 700 that the right was: "... an action to enforce payment of moneys due to the plaintiff, not by virtue of any contract, express or implied, but by virtue of a statutory obligation." Beaumont and Heerey JJ then mentioned Kilminster v Sun Newspapers Ltd (1931) 46 CLR 284, a case where a person was employed under an agreement stipulating a yearly salary and providing for his employment to continue until the expiration of a reasonable period of notice on either side. Subsequently, an award covering his calling came into operation. It provided for termination on two months' notice and the respondent gave this notice. In litigation conducted on the basis that the original agreement would have required more than two months' notice, the High Court held that the award did "not interfere with the rights of the parties with respect to longer notice by contract or otherwise". Beaumont and Heerey JJ observed at 338 that, "if cl.11(a) of the award is to be imported into the employment contract independently of the intention of the parties, then that can only be a result which flows from the terms of the award itself and the Act under which it was made". They examined the terms of that Act, the Conciliation and Arbitration Act, and asked at 339: "Could the terms of individual employment contracts be matters 'pertaining to the relationship between employers and employees' and thus capable of becoming the subject matter of an 'industrial dispute' and a subsequent award? The nature of the industrial arbitration function suggests that, ordinarily, attention will be focused on what the rights and obligations of employer and employee should be, rather than the terms of any existing or future contract between them, because the determination by the award of those rights and obligations will have effect independently of any employment contract and notwithstanding its terms." After referring to High Court decisions about the nature of an industrial dispute, their Honours said at 340: "The power to make awards does not depend on consent of the parties. From the award-maker's point of view there is no need to import the award into employment contracts and no practical benefit to be obtained from such importation; the terms of the award will create rights and obligations because of the statute-based power of the award-maker, whether the parties agree or not. If there is no logical basis for the award-maker to intend that award terms become incorporated into employment contracts there is, correspondingly, no reason for imputing to Parliament the intention of conferring the power to do so. We shall return to the question of statutory power in a moment. Before doing so we would make the further point that terms imported into employment contracts by awards would differ in one essential respect from most other contractual terms; they could not be varied by agreement of the parties to the contract. The incongruity of this result is highlighted by the fact that the parties to employment contracts - employer and individual employees - will not be the parties in the arbitral proceedings in which the award is made. Indeed individual employees as such are excluded from the arbitration process." Their Honours concluded this section of their judgment by saying at 342: "The award creates rights and obligations, and the Act confers remedies in the case of breach, both independently of the agreement of the parties and the common law of contract." When they referred to remedies, they presumably had in mind a proceeding for a penalty under s.178 or claim for wages under s.179. They could not have meant damages, since they were holding damages were not available. In relation to the second basis of Gregory, an implied term, Beaumont and Heerey JJ said at 343 that "it could hardly be said that a contract of employment would lack business efficacy without a term prohibiting termination that was harsh, unjust or unreasonable. Prior to the decision of the Conciliation and Arbitration Commission in the Termination, Change and Redundancy Cases (1984) 294 CAR 175 and (1984) 295 CAR 673 the general law of employment in Australia ... was that employers could terminate employment by giving the period of notice required, expressly or impliedly, by the contract of employment or without notice in the case of sufficiently serious misconduct", whether or not this was harsh, unjust or unreasonable, yet "employment contracts in Australia prior to 1984 did not thereby lack business efficacy". At 343-347 Beaumont and Heerey JJ considered the proposition that a right to damages was conferred by statute. They rejected it for reasons summarised in this passage at 346: "While a specific statutory provision for the payment of wages at a minimum rate to employees, equally with statutory provisions that dangerous machinery be fenced, is clearly enough for the benefit of employees as a class, the same cannot be said for award provisions in general. The legislation says nothing as to the content of award provisions, other than that they must relate to the subject matter of the 'industrial dispute'. Historically the purpose of the industrial arbitration system, the 'new province of law and order', was to resolve industrial disputes by conciliation and arbitration and so avoid the loss and disruption caused to both employer and employee by strike and lockout. In creating an award system the legislation discloses no intention to benefit employees as a class as opposed to employers. Sometimes provisions in awards will impose obligations on employees, such as the obligation to give notice of termination (cl.11(e) in the present award) and to use all appropriate equipment provided (cl.10(f)) and to check fuel, oil, water and tyre pressure at the commencement of shifts (cl.10(g)). Breach of such provisions could well cause substantial loss and damage to an employer." The remaining member of the majority, Keely J, agreed generally with Beaumont and Heerey JJ but added some observations. In relation to the implication of a contractual term, Keely J agreed with Jenkinson J in Gregory. But he disagreed with him in connection with the question whether a right to sue for damages was conferred by the Act, citing four reasons at 317; "1. The decision in Mallinson related to an obligation under an award to pay wages and is not, in its terms, authority upon the question. 2. A number of amendments have been made to the Act since Mallinson, including those in 1928 and in 1973 to which Jenkinson J referred in the passage quoted above from Gregory (at 461). In my respectful opinion the presence in s.179 (in 1989) of the words 'An employee entitled to the benefit of an award or order may ... sue for the amount of the payment ...' (emphasis added), is consistent with a legislative intention that the employee can only sue the employer 'for the amount of the payment' of a liquidated sum of money prescribed by the award. 3. The Act at the time of the dismissals included s.182, which provided that 'A proceeding may only be instituted under section 178 in relation to a breach of a bans clause if a certificate has been issued [by a Presidential Member of the Australian Industrial Relations Commission] under this Division in relation to the breach'. In my opinion the legislature cannot have intended to impose on registered unions unlimited liability for damages for 'a breach of a bans clause'; the history of the provisions for penalty supports that view. The Act also included s.178(2), which required that breaches which 'arose out of a course of conduct by the organisation or person ... shall ... be taken to constitute a single breach'; the maximum penalty for such a breach by an organisation was fixed at $1,000. 4. It may be added that in my opinion the legislation discloses no intention to benefit employees as a class as distinct from employers as a class." Black CJ agreed that the award provision regarding termination was not incorporated into the contract of employment, basically for the reasons given by Beaumont and Heerey JJ: see 305-307. But he thought that the provisions of the award concerning termination were implied, see 307-308, so the appellants were entitled to recover damages for breach. He then went on, at 308-312, to argue that, even if there was no implied term, "the appellants may still have a claim for damages for loss suffered consequent upon the respondent's breach of cl.11(a)". He explained that a contract of employment cannot be terminated unilaterally otherwise than in accordance with its terms and "(i)f a dismissal in breach of cl.11(a) is ineffective to determine the contract of employment, the actions of an employer in excluding an employee from work may amount to a repudiation of the still-existing contract and the employee may accept that repudiation as bringing the contract to an end and sue for damages for breach of it". Gray J thought that, because of the finding of the trial Judge and the course taken in respect of the appeal, Byrne was an inappropriate vehicle for consideration of the correctness of Gregory: see 358-360. But, recognising that the other members of the Court felt otherwise, he went on to address that question. In relation to implied term, he said at 360: "Before it finds that there exists an implied term of a contract, a court must ascertain what are the express terms of the contract and whether any essential matters remain uncovered by express provision. If so, the Court may consider whether the gaps are filled by means of an implied term. As was pointed out in Gregory, at 479-480, where the term to be implied is a term of an award made under the Act, there will rarely be any difficulty with the requirements that the term to be implied must be reasonable and equitable and must be capable of clear expression. The phrase 'business efficacy' must be understood in the context of an employment contract, so that what is required is to give 'employment efficacy' to the contract. The question is therefore whether the particular aspect for which provision is not made in the contract is necessary to make the contract efficacious as an employment contract. Given the detailed nature of awards, if the contract lacks detailed provisions as to hours of work, pay, conditions and termination, there should be no difficulty in finding that award terms are to be implied to make the contract efficacious. As to the requirement that the term be so obvious that 'it goes without saying', I agree with what Wilcox and Ryan JJ said in Gregory, at 479-480. Rather than the employer and the employee having attributed to them the intention to leave matters aside because they were provided for in the award, it is more appropriate to attribute to them the intention that the provisions of the award should govern the matter. Finally, in each case, the question whether there is an express term of the contract inconsistent with the proposed implied term will be one of fact." Turning to the other ground relied on in Gregory, Gray J observed, at 361, that the "text books dealing with employment law are replete with implied obligations owed by one party to an employment contract to the other". He cited examples and said at 362: "These implied terms of the employment relationship have not resulted from the application of the tests in the BP Refinery case, or the earlier law relating to implied terms in contracts. Rather, they have been imposed on the parties by the law, as a matter of policy. They are regarded by the law as proper incidents of the employment relationship and are applicable in the absence of express agreement to the contrary. In part, this situation results from the history of the law of employment. Until the 19th century, the employment relationship, or 'master-servant' relationship was not regarded as one of contract. The master had quasi-proprietary rights in a servant hence the existence of the common law action by a master for deprivation of the services of a servant injured by the fault of another) and the servant's position was akin to a status." After commenting on the slow development of employment law in Australia, Gray J concluded this section of his judgment by saying at 365: "This Full Court is faced with a clear policy choice. It can follow Gregory, thereby prising employment law in Australia from the grip of 19th century judges and correcting some of the imbalance inherent in employer-employee relationships, while at the same time parallelling developments in other common law countries and adhering to internationally recognised standards. Alternatively, it can overrule Gregory, on the basis of a technical view as to its correctness as a matter of authority. In my view, the choice is clear. This Court should hold that cl.11(a) became a term of the contract of employment of each of the appellants, independently of the intention of the parties to that contract. The term cannot be excluded by express agreement, because the law regards it as a proper incident of an employment contract and because its origin is in the Act. Such a decision would not carry with it any principle that all terms of all awards are to be imported into the contracts of employment of those whose conditions of employment are prescribed by the relevant awards. The importation of some award terms will be inappropriate." In the present case, counsel for the respondent submits that I should follow the majority decision in Byrne, whether or not I am persuaded by it. Counsel accepts that, sitting in the Industrial Relations Court, I am not bound by the decision, but he argues that to fail to take this course would be to bring the law into disrepute. He refers to cases, McColl v Bright (1937) VLR 204 and Body Corporate Strata Plan No.4303 v Albion Insurance (1982) VR 699, wherein Victorian judges have spoken of the desirability of one Supreme Court following a decision of another, unless persuaded it was "manifestly wrong". Counsel for the applicant, on the other hand, argues that I am free to determine the matter for myself and should do so. He argues that the majority decision in Byrne is wrong, for reasons he develops. I think it would be inappropriate for me to form a firm view about the correctness of Byrne. The policy of deference referred to in the cited Victorian cases is important to legal harmony in Australia, with its multiple jurisdictions. I have reservations about the view of the Byrne majority but I would not presume to describe it as "manifestly wrong". Moreover, the High Court is soon to consider this very issue. If I were to make orders in accordance with any view I might form, the party disadvantaged by those orders would undoubtedly protect himself or itself against the possibility of a different outcome in the High Court by filing a notice of appeal. This would force upon the parties, and the Court, an appeal that might be avoided if orders were deferred until the High Court's decision was known. Accordingly, I do not propose to form any final view about this aspect of the case or make orders in connection with it. I will defer final orders and reserve liberty to the parties to make application for them later. No doubt someone will do so after the High Court decision. Notwithstanding this attitude, in the hope that they may be helpful, I offer some comments on the debate about Gregory. The debate has raised many points not argued in the case itself, so it is not difficult for me to avoid being defensive about views then expressed. With the benefit of the subsequent debate, I think Ryan J and I might have been wrong to tie our first basis of liability to the importation of a term into the contract, as stated by Dixon J in True. I am persuaded, especially by the reasoning of Beaumont and Heerey JJ in Byrne, that there are difficulties in that approach. But this does not mean that it is necessary to discard an approach based on cases like Mallinson, True and Gough; the proposition being that stated by Windeyer J in Gough, that the award provisions superimpose new rights on the common law incidents of the master-servant relationship. This is what Jenkinson J said in Gregory; it is the alternative basis of liability suggested by Black CJ in Byrne. Despite criticisms of what Jenkinson J said, it seems to me it must be so. It is the rationale of Gough and the only approach that makes sense of the award-making system. It is true that applications for awards are usually made by employee organisations, not the employees themselves, but the organisations do so on behalf of their members and in order to improve members' wages and conditions of work. What would be the point of this effort if award provisions did not give rise to legally enforceable rights by an employee against the employer? Employee organisations would not go to the trouble and expense of persuading the Commission to insert into awards provisions beneficial to their members merely to enable them to seek a small penalty in the event of breach. Despite what was said by Beaumont and Heerey JJ, I am not persuaded that there is anything incongruous in the notion of the terms of individual employment contracts being matters "pertaining to the relationship between employers and employees"; on the contrary, it seems to me that the content of the employment contract is at the heart of that relationship. But if the relevant proposition were changed, so as to emphasise the rights and obligations imposed on an employer and an employee by an award, Beaumont and Heerey JJ would have no difficulty with it. As they said in a passage at 339 quoted above, industrial arbitration focuses attention "on what the rights and obligations of employer and employee should be"; in other words, in exercising its arbitral powers, the Commission creates rights and obligations. This is consistent with the approach of Griffith CJ in Josephson v Walker when he spoke of "an obligation" being "created" by an award that confers a "right" in the employee "to receive the wages so fixed". If an award can create a legally-enforceable right to receive wages in accordance with its tenor, why should it be different in relation to other types of rights, including a right not to be dismissed harshly, unjustly or unreasonably? Contrary to some suggestions, there is no conflict between this approach and the principle that an employee is free to negotiate a condition of employment that is more beneficial than the corresponding award provision. It has long been accepted that an agreement for an over-award wage is enforceable. The principle was explained by Dixon J in True. Kilminster shows that the same principle applies to non-monetary benefits. As I understand their judgment, the major reason why Beaumont and Heerey JJ rejected the notion that an award created obligations by an employer towards employees that were enforceable by an action for damages is that the legislation creating the award system did not disclose any "intention to benefit employees as a class as opposed to employers". That is true; but the legislation envisages that awards will create rights and obligations that bind the parties: see s.149(1) of the Act. Against that background it is but a small step to attribute to Parliament an intention that those provisions of an award that are clearly inserted for the benefit of employees as a class are to be enforceable by a member of that class. It is a mistake, I respectfully suggest, to look at the intent of the legislation in globo rather than the intention behind the insertion of a particular award provision. Another factor that influenced Beaumont and Heerey JJ in concluding that an employer was not liable in damages for a breach of an award was that, if it were so, by parity of reasoning employees and unions would be liable to pay damages to employers if they breached the award. This, of course, would be so only if two conditions were satisfied. First, the particular employee or union would have to be bound by the award; a matter that would depend in each case on the application of s.149(1) of the Act and the terms of the award itself. Second, the relevant obligation would have to be one capable of legal enforcement. Awards rarely impose obligations of this nature on individual employees. And I am not aware of any award that imposes obligations of that type on a union. Finally, Beaumont and Heerey JJ were influenced by the existence of the penalty provisions. Undoubtedly this is relevant; but the same comment may be made about s.178 of the present Act, with a substitution of "the protection against dismissal" for "payment to him of the wages", as was made by the High Court in Mallinson at 74: "... while the right to institute proceedings is conferred on any member of an organization who is affected by the breach or non-observance of the award (sec.44(2)(c), the amount of the penalty bears no relation to the injury that may have been occasioned to the individual by the breach complained of, and the complainant is not entitled as of right to any portion of the amount paid by way of penalty, though by sec.45 the Court imposing the penalty may order that the penalty, or any part thereof, be paid to such person as is specified in the order. It is clear, therefore, that these provisions afford an employee no means of enforcing payment to him of the wages which the Act operating on the award entitles him to receive from his employer." My second observation relates to the suggestion that relevant award conditions may be implied in an employment contract. Ryan J and I referred to BP Refinery, with its reference to "business efficacy". Of course, we were speaking in an employment context. As Gray J suggested in Byrne at 360, the term "employment efficacy" might be more apt. Even so, it would have been useful for us to have included a reference to Liverpool City Council v Irwin [1977] AC 239. That case involved a dispute between landlord and tenant. There was a question as to the terms of the relevant agreement. All members of the House of Lords held that the agreement was subject to some implied terms. At 254-255 Lord Wilberforce commented: "I do not think that this approach involves any innovation as regards the law of contract. The necessity to have regard to the inherent nature of a contract and of the relationship thereby established was stated in this House in Lister v Romford Ice and Cold Storage Co. Ltd. [1957] A.C. 555. That was a case between master and servant and of a search for an 'implied term.' Viscount Simonds, at p.579, makes a clear distinction between a search for an implied term such as might be necessary to give 'business efficacy' to the particular contract and a search, based on wider considerations, for such a term as the nature of the contract might call for, or as a legal incident of this kind of contract. If the search were for the former, he says, '... I should lose myself in the attempt to formulate it with the necessary precision.' (p.576.) We see an echo of this in the present case, when the majority in the Court of Appeal, considering a 'business efficacy term' ... found themselves faced with five alternative terms and therefore rejected all of them. But that is not, in my opinion, the end, or indeed the object, of the search." If regard be had to the inherent nature of a contract between an employer and employee, whose relationship is already governed by an industrial award the terms of which are not enforceable by an action for damages except under the law of contract, there seems to me a strong case for concluding that those elements in the award that impose a legal obligation on one party towards the other are implied into the contract of employment. With respect to Beaumont and Heerey JJ, the question is not whether it would be possible to have an efficacious contract of employment without a term proscribing harsh, unjust or unreasonable dismissal but whether, that limitation being already imposed on the employer by an award, the inherent nature of the contract between employer and employee, and the relationship that arises out of it, requires courts to treat that obligation as an incident of their contract. One can only regard as fanciful the alternative scenario contemplated by Beaumont and Heerey JJ in Byrne at 347, of an employer and employee negotiating about the question "whether award provisions are to be expressly incorporated in the contract ... and thus create contractual remedies in case of breach." It will be apparent that I accept some of the criticisms that have been made of the reasoning adopted by Ryan J and myself in Gregory. But I do not repent the result of the case. In the article mentioned above, Professor McCallum at 415 described Gregory as "a remarkable breakthrough in federal law". He said that it had "at last given employees meaningful remedies for what are, in effect, employer breaches of award clauses". If the High Court confirms the overturning of Gregory, this will leave a major gap in industrial law. Employer obligations inserted in awards for the benefit of employees will only be enforceable by employees who are aware that they must press for the inclusion of the obligations in the contract of employment as well, and sufficiently articulate and powerful to obtain this result. This will rarely occur. In the particular case of a harsh, unjust or unreasonable dismissal an employee may have an alternative basis of claim; namely, the right of action for unlawful termination conferred by Subdivision C of Division 3 of Part VIA of the Industrial Relations Act. But this remedy is not available to all employees employed under awards: see s.170CC of the Act and regulation 30B of the Industrial Relations Regulations. And, even where it is available, the allowable compensation may fall well short of the damage suffered by the employee. Compare the maximum compensation fixed by s.170EE(3) and (4) (six months remuneration or $30,000, whichever is the less) with the damages award in Bostik ($195,000). The quantum of damages Notwithstanding that I do not propose to make any orders at this stage, I think it desirable that I indicate my view about the quantum of the applicant's damages. To do so will facilitate disposal of the case in the event that the Byrne appeal is successful. Mr Gooley did not receive any termination pay or pay in lieu of notice when he was dismissed. He attempted to obtain other employment but was initially unsuccessful. Eventually, he obtained employment with Bridges Financial Services Limited, commencing on 28 September 1992. So he was unemployed for 66 days. His loss for this period, at the rate of $100,000 per annum, was $18,082. Mr Gooley's salary at Bridges was $65,500 per annum until 1 January 1994 when he received an increase to $100,000 per annum - the same amount he had been paid by Westpac. The difference between the two rates of pay in the period 28 September 1992 to 31 December 1993 amounts to $44,205. Counsel for the applicant argues that the award of damages should reflect the fact that his client was dismissed in breach of the award. He refers to what was said by Black CJ in Byrne at 311 that, in determining the measure of damages, "it would be necessary to take into account the circumstance that the employer could not lawfully determine the contract of employment, with or without notice, if the termination was harsh, unjust or unreasonable". I agree with this and think it is not an answer for counsel for the respondent to say, as he does, that Mr Gooley might have been dismissed anyway on four weeks' notice. Mr Gooley had been employed by Westpac, or its subsidiary BAC, for almost three years at the time of his dismissal. He had apparently given good service. There is nothing to suggest that he would have been dismissed at all, absent the incorrect conclusion of Mr Pearsall and Mr Thomsen that he was guilty of serious misconduct. In my opinion Mr Gooley is entitled to recover his full financial loss. The gross loss seems to be $18,082 plus $44,205, a total of $62,287. Interest should be added computed at the rate of 10% per annum, on $18,082 from 25 August 1992 to the date of judgment and on $44,205 from 15 May 1993 until judgment. In dealing with damages I note that no submission has been put to me that the Court should allow an additional sum by way of damages to compensate Mr Gooley for the distress, humiliation and loss of reputation that must have been caused to him by his dismissal on a ground as significant as serious misconduct. The traditional rule is that such damages are not recoverable - see Addis v Gramophone Company Limited [1909] AC 488 - though Gray J has recently suggested this rule should no longer be followed in Australia: see Gray "Damages for Wrongful Dismissal: Is the Gramophone Record Worn Out?" in "Employment Security", ed. McCallum, Ronfeldt and McCarry, Federation Press, 1994. Nor has it been submitted, on the other side of the record, that the losses of salary calculated above ought to be discounted because of taxation; as to which see Mitchell and Telfer "The Taxation Implications of Statutory Unlawful Terminations of Employment" in (1994) 7 Australian Journal of Labour Law at 233-237. If either of these matters was to be raised, this should have been done in the written submissions directed last year. Notwithstanding that, as damages are not being awarded at this time, if the matter of damages arises, I will entertain any submissions the parties wish to make on these subjects. The defamation claim It will be recalled that the amended Statement of Claim raises two defamation claims. The first arises out of the file note of the meeting between Mr Gooley, Mr Rollason, Mr Pearsall, Mr Thomsen and Mr Leaming on 24 July 1992. I will deal with that in a moment. The second arises out of a minute circulated to bank employees on 27 July announcing Mr Gooley's dismissal "on a Code of Conduct issue". Counsel did not tender the minute or offer evidence in support of this claim. It may be ignored. In relation to the file note, I think the applicant has made good most of the elements of his claim. However, he stumbles at the last hurdle. There is no doubt that the words in the file note of 24 July 1992 relied on by the applicant are defamatory. Counsel for the respondent does not suggest otherwise. I think it is also clear, although there is a dispute about this matter, that the case falls within the principle discussed by Hunt J of the New South Wales Supreme Court in Jones v Amalgamated Television Services Pty Ltd (1991) 23 NSWLR 364. At 368-369 his Honour said: "It seems to me to be arguably well within established common law principle that, where an employer dismisses an employee for the stated reason that he has been guilty of misconduct, and where the employee discloses that reason to another person, the employer will be liable to the employee for the publication to that person of the defamatory imputation conveyed by the disclosure of that reason if (a) that other person had a legitimate interest in receiving that information, (b) the employee was under at least a moral obligation to disclose to that other person the real reason which had been given to him for that dismissal, and (c) the employer must reasonably have anticipated that the employee would be actuated by that obligation to make that disclosure." Counsel says that, on this basis, Westpac is liable for the publication of the matter in the file note on 28 July 1992. However, he concedes that this publication was made on an occasion of privilege; so the applicant is entitled to succeed in his defamation claim only if Westpac was actuated by malice. Malice, in this context, means a lack of honest belief in the truth of what was published, recklessness as to its truth or falsity or publication for an improper purpose: see Horrocks v Lowe [1975] AC 135. Given that the respondent is a corporation, the relevant inquiry concerns the state of mind of the persons who acted as its agent in publishing the letter; that is, Mr Pearsall and Mr Thomsen. Counsel for the applicant submits that they were actuated by malice; either because they knew that Mr Gooley's conduct did not amount to serious misconduct or, alternatively, recklessly failed to consider whether it did or not. He points out that Mr Pearsall admitted he was aware of the serious effect on Mr Gooley of a termination on the ground of serious misconduct but that he relied on Mr O'Neill's report and the advice given to him as to the confidentially of the document. Mr Thomsen relied substantially on Mr O'Neill's report. It cannot be seriously maintained that Mr Pearsall and Mr Thomsen knew that Mr Gooley was not guilty of serious misconduct. The real issue is whether they were recklessly indifferent to this question. I have already criticised the extent of their consideration of it and the logic they employed. But the issue whether they were recklessly indifferent to the existence of serious misconduct depends not upon the sufficiency of their consideration of the evidence or the appropriateness of their logical processes but upon their subjective attitudes. As Lord Diplock said in Horrocks v Lowe at 150, "... indifference to the truth of what he publishes is not to be equated with carelessness, impulsiveness or irrationality in arriving at a positive belief that it is true." However flawed their decision, it cannot be said that Mr Pearsall and Mr Thomsen made it recklessly. They were aware of the significance of their decision. They made it deliberately and with an honest belief in its correctness. Malice is not established. The defamation claim must fail. I have already mentioned the costs undertaking given by the applicant in connection with the defamation claim. Although that claim fails, the joinder of the defamation claim did not extend the hearing or increase costs. Consequently, it is not appropriate for me to made any order pursuant to the undertaking. Orders As indicated, I do not propose to make any final orders at this stage. I think it better to defer this step until the outcome of the Byrne appeal is known. Orders may then be made in respect of all aspects of the case. If any appeal is then brought, the Full Court will be able to deal with all contentious matters at the same time. I certify that this and the preceding seventy-three (73) pages are a true copy of the Reasons for Judgment of his Honour Chief Justice Wilcox. Associate: Dated: 3 April 1995 APPEARANCES Counsel for the Applicant: B R McClintock Solicitor for the Applicant: Gadens Ridgeway Counsel for the Respondent: J J Fernon Solicitor for the Respondent: Freehill, Hollingdale and Page Dates of hearing: 8-10 June 1994