Supreme Court New South Wales Medium Neutral Citation: Roderick v Washington H Soul Pattinson & Company Limited (No 2) [2020] NSWSC 1224 Hearing dates: 1, 4, 5, 6 and 7 May 2020 Date of orders: 10 September 2020 Decision date: 10 September 2020 Jurisdiction: Common Law Before: Cavanagh J Decision: (1) Judgment for the plaintiff for the sum of $1,105,329.50. (2) The defendant is to pay the plaintiff's costs. (3) Should either party seek a variation of that costs order, I grant liberty to apply on three days' notice. Catchwords: EMPLOYMENT AND INDUSTRIAL LAW — Contract — Termination without notice — Whether original written contract applied or had been varied or discharged in ongoing relationship of employment — Objective assessment of parties' mutual intention — Necessity for implied term as to reasonable notice in new contract — Determination of reasonable notice period EMPLOYMENT AND INDUSTRIAL LAW — Contract — Remuneration — Discretionary bonuses — Employee's eligibility for payment of benefits under short and long term incentive plans — Nature and extent of employer's discretion to assess and pay bonuses — Limits on the exercise of a discretion CONTRACTS — Remedies — Damages — Loss of chance — Loss of opportunity to obtain commercial benefit — Effect of reasonable notice period on employee's entitlement to payment of benefits under incentive plans EMPLOYMENT AND INDUSTRIAL LAW — Contract — Repudiation — Acceptance of repudiation — Impracticality for employee to do other than accept repudiation — Party cannot benefit from its own wrong Legislation Cited: Corporations Act 2001 (Cth), s 211 Fair Work Act 2009 (Cth), s 119 Cases Cited: ASIC v Healy (2011) 196 FCR 291 Bartlett v Australia and New Zealand Banking Group Ltd (2016) 92 NSWLR 639; [2016] NSWCA 30 Byrne v Australian Airlines Ltd (1995) 185 CLR 410; [1995] HCA 24 Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 54 Conway-Cook v Town of Kwinana [2001] WASCA 250 Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 Ma v Expeditors International Pty Ltd [2014] NSWSC 859 Maredelanto Compania Naviera SA v Bergbau-Handel GmbH (The Mihalis Angelos) [1971] 1 QB 164 New South Wales Cancer Council v Sarfaty (1992) 28 NSWLR 68 Quinn v Jack Chia (Australia) Ltd [1992] 1 VR 567 Rankin v Marine Power International Pty Ltd [2001] VSC 150 Roderick v Washington H Soul Pattinson & Company Limited [2020] NSWSC 1223 Washington H Soul Pattinson & Company Limited v Roderick [2020] NSWSC 1225 Russell v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney (2007) 69 NSWLR 198; [2007] NSWSC 104 Sanders v Snell (1998) 196 CLR 329; [1998] HCA 64 Sellars v Adelaide Petroleum NL; Poseidon Ltd v Adelaide Petroleum NL (1994) 179 CLR 332; [1994] HCA 4 Shea v TRUenergy Services Pty Ltd (No 6) [2014] FCA 271; 314 ALR 346 Silverbrook Research Pty Ltd v Lindley [2010] NSWCA 357 Spartalis v BMD Constructions Pty Ltd [2014] SASCFC 124 Spartalis v BMD Constructions Pty Ltd (2014) 120 SASR 575; [2014] SASCFC 124 Tallerman and Company Proprietary Limited v Nathan's Merchandise (Victoria) Proprietary Limited (1957) 98 CLR 93 TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd (1989) 16 NSWLR 130 Toll (FGCT) Pty Limited v Alphapharm Pty Limited & Ors (2004) 219 CLR 165; [2004] HCA 52 Westpac Banking Corporation v Wittenberg (2016) 242 FCR 505; [2016] FCAFC 33 Texts Cited: Mark Irving, 'Australian and Canadian approaches to the assessment of the length of reasonable notice' (2015) 28 Australian Journal of Labour Law 159 Category: Principal judgment Parties: Melinda Rose Roderick (Plaintiff) Washington H Soul Pattinson & Company Limited (Defendant) Representation: Counsel: G McNally SC with D Stewart (Plaintiff) D Sulan with J Entwisle (Defendant) Solicitors: Gillis Delaney Lawyers (Plaintiff) Baker McKenzie (Defendant) File Number(s): 2018/204098 Publication restriction: None Judgment Introduction Background facts The witnesses Evidence about the plaintiff's performance Original or new contract? Reasonable notice The STI claim The parties' positions Consideration The LTI Plans The 2015 and 2016 LTI Awards The 2017 LTI Award Repudiation Orders Judgment Introduction 1. This matter involves a consideration of the entitlements payable to a senior executive of a large public company following termination of her employment. These entitlements are alleged to have included payments under short and long term incentive schemes, which the defendant maintains were entirely discretionary. 2. During the period 2006 to 12 April 2018, Melinda Rose Roderick ("the plaintiff") was employed by Washington H Soul Pattinson and Company Limited ("the defendant" or "the company"). 3. On 12 April 2018, the plaintiff's employment was terminated without notice and, on the plaintiff's case, without explanation. At the time, she was the second most senior employee in the company and the only woman on the board. There is no suggestion of any conduct on her part which could have justified termination in this manner. 4. A payment in lieu of notice of three months' salary was made in July 2018, albeit, even on the defendant's case, there was no contractual entitlement to make a payment in lieu rather than provide a period of notice. It thus could not be in dispute that, in purporting to terminate the plaintiff in this manner, the defendant acted in breach of the contract of employment. It did not give her any notice at all. 5. She claims damages from the defendant, including: 1. payment of her salary in respect of the period of notice that she says should have been afforded to her, being 24 months; 2. payment of an amount representing her alleged entitlements under a long term incentive ("LTI") plan; and 3. payment of an amount representing her alleged entitlements under a short term incentive ("STI") scheme. 1. The plaintiff's case on damages is that she has lost the benefits which would have been payable to her if the defendant had given the period of notice as required by the contract. [1] 2. The correct approach to an assessment of damages in a case such as this (should the plaintiff succeed at all) is to consider what period of notice the defendant should have given and then assess loss based on the salary that would have been paid during that period as well as assess any non-fixed entitlements based on the loss of an opportunity to obtain a commercial benefit. [2] 3. The plaintiff also pursues an alternative case that, even if the defendant was only required to give three months' notice, she is still entitled to payment under the STI scheme and LTI plans. 4. In its annual report the defendant describes itself as a significant investment house with a portfolio encompassing many industries, including its traditional field of pharmaceuticals, as well as coalmining, building materials, copper mining and refining equity investments, property investments, telecommunications and corporate consulting. It is currently an ASX 100 company. 5. At the time of her termination, the plaintiff was employed as the Finance Director. She commenced employment with the defendant in June 2006 in the position of Chief Financial Officer. Her employment was confirmed by way of a letter to her from the defendant dated 26 June 2006. 6. The parties agree that the terms and conditions of her employment were originally as set out in the letter of 26 June 2006 ("the original contract"). That contract contained an express term requiring the defendant to give three months' notice. 7. However, the plaintiff maintains that that original contract was discharged or varied when she was appointed Finance Director. 8. A draft new employment contract was prepared by the defendant in 2015 but never signed by the plaintiff. It was admitted into evidence (without objection from either party). Neither party submits that that document reflects the governing employment contract as at April 2018. 9. The defendant says that the parties remained bound by the original contract. Although it did not give notice (three months) in accordance with that contract, it paid an amount in lieu subsequently, such that it says that the breach is of no consequence. She is not entitled to damages. 10. Further, the defendant says that, having regard to the LTI plan rules and the operation of the STI scheme, the plaintiff was not entitled to payment of any additional benefits, having been terminated prior to the assessment by the defendant of benefits payable under the STI scheme and LTI plans. 11. The parties filed an agreed statement of facts and issues (with some slight variation). Many of the facts are not in dispute. 12. The hearing proceeded over five days. The plaintiff was represented by Mr McNally SC with Mr Stewart and the defendant was represented by Mr Sulan of Counsel with Mr Entwisle. Counsel appeared by video link and the witnesses gave evidence in the same way. 13. The plaintiff relied on her own affidavits of 23 November 2018, 5 July 2019, 30 September 2019 and 17 April 2019. She was cross-examined. The defendant adduced evidence from Mr Warwick Negus, a Board member who was head of the Remuneration Committee of the defendant for a time, and Mr Ian Bloodworth, the company secretary. The defendant did not call its CEO, Mr Todd Barlow, although one paragraph of an affidavit of Mr Barlow, which had been served but was not relied on by the defendant, was tendered by the plaintiff. Background facts 1. On 26 June 2006, the plaintiff commenced employment with the defendant in the position of Chief Financial Officer. As set out in the letter confirming the offer of employment, her total remuneration package was $250,000 per annum. The plaintiff continued in that position until October 2014 when she was appointed Finance Director. At that time she was also appointed a director of the defendant and 12 related companies. Her role as Finance Director incorporated all of the duties she had previously performed as CFO. She was also required to perform other additional duties. 2. There is no evidence that between 2006 and 2014 there were any performance-related issues or any other issues which might be relevant to these proceedings. Indeed, it is a curious feature of this case that despite the defendant maintaining that the plaintiff was terminated for performance issues, there is not one document in evidence for the period before or after her termination in which there is any reference to her performance (other than the STI assessment forms). This absence includes the minutes of the Board and the Remuneration Committee. Even the termination letter does not refer to any performance issues as being the reason for her termination. 3. In September 2014, the plaintiff attended a meeting at the office of the Chairman. The Chairman asked her to become a member of the Board. According to the plaintiff, Mr Hawker — the Chair of the Nomination Committee of the defendant — said that he wanted her "here" long term and wanted her to become the Finance Director which he described as an "executive director position". 4. On 25 September 2014, the defendant issued an ASX announcement referring to the plaintiff's appointment to the Board. The 2014 Annual Report contains the following: "Ms Melinda Roderick will join the Board on 1 November 2014 as a Finance Director. Melinda has over 24 years accounting and operational experience having previously held senior financial roles within the financial services and insurance sectors including eight years as an external auditor within a chartered accounting practice. She joined WHSP in 2006 as the Chief Financial Officer and has a comprehensive understanding of the Company's complex accounting matters. In this role she has provided valuable input to the Board." 1. Following the plaintiff's appointment, there were two executives on the Board: Mr Peter Robinson (described at the time as the Executive Director) and the plaintiff. They were the only two executives who reported directly to the Board. They were the two most senior executives in the company. 2. In October 2014, the plaintiff had a further conversation with Mr Robinson as follows: "Robinson: 'With your new role as Finance Director I have asked David Wills to draft a new executive director employment contract for you.' [Plaintiff]: 'Thank you'. Robinson: 'I have also spoken to the Chairman and agreed with him that it is now appropriate in your new role that you will report directly to the Board'." 1. By letter dated 27 October 2014, the defendant confirmed its invitation for the plaintiff to join the Board as an executive finance director. The letter set out the basis of her appointment to the Board and information relevant to her position as an executive director of the defendant. As set out in the letter, no director's fees were payable to her as she would be an executive director. The plaintiff signed the acknowledgement on 29 October 2014 as follows: "Acknowledgement I, Melinda Rose Roderick, confirm that the arrangements for my appointment as a director of Washington H Soul Pattinson and Company Limited as detailed above are acceptable to me." 1. On 5 November 2015, the defendant issued its annual report. An annual report was issued for each year that the plaintiff remained employed by the defendant. In the remuneration report for key executives (which formed part of the annual report) the plaintiff was described as follows: "Ms M R Roderick – Finance Director and Chief Financial Officer from 1 November 2014, formerly Chief Financial Officer." 1. In either January or February 2015, the plaintiff was provided with a draft executive employment agreement, which had been prepared by solicitors for the defendant. The plaintiff made handwritten comments on the document, although it is not clear when she made those comments. The document was never agreed to or signed. The plaintiff says that she approached the then Head of the Remuneration Committee of the defendant, David Willis, on at least two occasions to arrange a meeting regarding her suggested amendments and comments but no meeting ever eventuated. 2. Further evidence emerged during cross-examination of the plaintiff on this issue on which I will comment later in this judgment. 3. On 4 December 2015, an annual general meeting took place. At the meeting, the defendant sought shareholder approval under ASX Listing Rule 7.2 for the company's LTI plan and the issue of performance rights and options under that plan. Set out in the explanatory notes to the notice of the annual general meeting is a summary of the key terms of the LTI plan. Item 6 in the explanatory notes related to the grant of performance rights to Mr Barlow, who had become the CEO and Managing Director of the defendant following Mr Robinson's retirement as Executive Director at the end of March 2015. Item 7 related to the grant of performance rights to the plaintiff and relevantly provided: "The non-executive Directors of the Company believe that the Long Term Incentive Plan is an appropriately designed equity-based employee incentive scheme that links executive reward to increases in shareholder value and acts as a retention tool for key executives. … The Board has considered the application of Chapter 2E of the Corporations Act to the issue of performance rights to Ms Roderick and considers that the financial benefit given by such grant of performance rights constitutes reasonable remuneration to Ms Roderick for the purposes of section 211(1) of the Corporations Act: (a) given the circumstances of the Company; and (b) Ms Roderick's role and responsibilities at the Company. Given the above, the Company is not seeking shareholder approval pursuant to section 208 of the Corporations Act in addition to the approval being sought under the ASX Listing Rules." 1. Having regard to s 211 of the Corporations Act 2001 (Cth), it must be that the defendant considered that the performance rights issued to the plaintiff (both in 2015 and 2016) constituted reasonable remuneration for the plaintiff, having regard to its own circumstances and the plaintiff's role and responsibilities. 2. On 10 December 2015, the defendant wrote to the plaintiff regarding a remuneration review for the period commencing 1 January 2016. The defendant referred to the introduction of the STI plan and LTI plan in respect of certain senior executives. The plaintiff was invited to participate both in the STI and LTI plans. 3. On the same day, 10 December 2015, the defendant wrote to the plaintiff inviting her to participate in the group's LTI. It annexed the terms of the invitation and the plan's rules. The plaintiff signed an application form and other documents evidencing her acceptance of the invitation on the terms set out in the accompanying documents. 4. On 10 March 2016, Mr Barlow prepared a memorandum in respect of the revised STI structure. There followed a memorandum of 11 April 2016 setting out the operation of the STI scheme. Unlike the LTI, no plan rules were formulated in respect of the STI scheme. 5. As part of the operation of the STI scheme, the plaintiff was required to undertake a self-assessment, which she completed for the year ending 31 July 2016. 6. On 10 October 2016, Mr Barlow made recommendations in respect of the plaintiff's entitlement to the STI plan. Although parts of his memo are redacted, there is reference to his assessment or grading of the plaintiff. 7. On 12 October 2016, the Remuneration Committee of the defendant met and recommended that the plaintiff be awarded $170,082 in respect of STI payments for the seven months ending 31 July 2016. Further, the Committee made recommendations in respect of the LTI plan for the year ending 31 July 2017. 8. It was also agreed that the plaintiff would be remunerated and the fixed amount of her salary would be $690,000 per annum. 9. In each of 2016 and 2017, the plaintiff received payments through the STI scheme. That is, she was assessed as having satisfied the conditions of the scheme and entitled to payments. 10. In each of 2015 and 2016, the plaintiff was invited to apply for and did apply for and was issued performance rights through the LTI plans. A proportion of those rights first vested in September 2018. 11. The defendant issued a corporate governance statement for the year ending 31 July 2017. Under the heading "Principle 1 — Lay solid foundations for management and oversight" and following discussion under the sub-heading "Diversity", it made the following statement: "Board Reviews The Chairman is responsible for monitoring and assessing the performance of individual Directors, each Board Committee and the Board as a whole. The Chairman interviews each Director and provides feedback regarding their performance. At this interview each Director is invited to comment on the performance of the Board as a whole and the performance of other Directors. The Board as a whole continuously monitors the efficiency and effectiveness of its operations on an informal basis. The performance of each Director of the Company was assessed, as set out above, during the year. Senior Executive Reviews The performance of the MD is evaluated by the Board with reference to the overall performance of the Company and of its subsidiaries and associates in which the MD represents the Company. Both qualitative and quantitative measures are used to evaluate performance. The Board evaluates the performance of the Finance Director. The MD evaluates the performance of the other senior executives. The Board also reviews the performance of these executives via the monthly Board reports and their attendance at Board meetings. The performance of the senior executives of the Company was assessed, as set out above, during the year." 1. In September 2017, the defendant published amendments to its LTI plan. The plaintiff was granted further performance rights under the new LTI plan. 2. In October 2017, the defendant or its recruitment consultant prepared a draft confidential position specification for the position of Chief Financial Officer. It must be that the defendant was at least considering the termination of the plaintiff at that time as the plaintiff's role incorporated the role of CFO. It is notable that, in the new role, the CFO would report to the CEO. There is no suggestion of reporting directly to the Board or being on the Board. 3. On 1 October 2017, the defendant published its rules in respect of the new version of the LTI plan. 4. At the AGM on 8 December 2017, the directors unanimously recommended the reappointment of the plaintiff as a director and the plaintiff was re-elected. The grant of further LTI performance rights to the plaintiff was approved. 5. On 12 April 2018, the plaintiff's employment was terminated without notice. In addition to being spoken to she received a letter delivered by hand. The defendant appointed a person as CFO the next day, I infer, as a result of the search it had been undertaking since at least October 2017. 6. On 18 April 2018, the defendant made an ASX announcement that the plaintiff had resigned. She had not resigned. 7. On 13 July 2018 the defendant made a payment to the plaintiff of $172,000 gross, being an equivalent to three months' salary. No further payments have been made to the plaintiff. 8. On 3 July 2018, the plaintiff commenced these proceedings. On 8 April 2019, the plaintiff amended her statement of claim and, on 4 May 2020, sought leave to further amend her statement of claim. On 4 May 2020, I granted the plaintiff leave. [3] The defendant was granted leave to file and did file an amended defence on the last day of the hearing (7 May 2020). 9. By memo dated 31 August 2018, Mr Barlow provided a remuneration review for the Remuneration Committee. 10. On 12 September 2018, there was a meeting of the Remuneration Committee chaired by Mr Negus. Mr Barlow was in attendance as the Managing Director. The Committee resolved to recommend to the Board STI payments. In the minutes of the meeting, the committee considered the LTI rights to be granted in respect of the year ended 31 July 2019. 11. There is a section "Other Business" which was again partially redacted as follows: "Melinda Roderick LTI rights It was noted that Ms. Roderick had been granted a total of 34,867 LTI rights in respect of the years ended 31 July 2016 and 2017 which were unvested. [Redacted] It was RESOLVED to recommend to the Board that the rights be forfeited and that the letter be sent to Ms. Roderick." 1. The Board met on 12 September 2018. It resolved to adopt the recommendations of the Remuneration Committee which had met earlier that day. On 12 September 2018, the defendant wrote to the plaintiff including the following: "We hereby advise that the Board has determined for the purposes of clause 10.1 and 10.3 of the LTIP Rules that you will not be permitted to retain any of the Unvested Performance Rights. Accordingly, the Unvested Performance Rights will, on the date of this notice, automatically lapse under clause 11 of the LTIP Rules." 1. On 24 April 2020, the plaintiff informed the defendant that it would be withdrawing its claim to redundancy payments set out in the statement of claim. 2. On that same day, the plaintiff commenced proceedings in the Federal Circuit Court claiming a redundancy payment under s 119(1)(a) of the Fair Work Act 2009 (Cth). In those proceedings, the plaintiff names the defendant as well as five directors as defendants. The plaintiff seeks the imposition of pecuniary penalties against the defendants. 3. Subsequent to commencement of the Federal Circuit Court proceedings, the defendant and the directors filed a summons seeking orders restraining the plaintiff from pursuing those proceedings. I deal with that application in a separate judgment. [4] 4. The plaintiff has not obtained employment since her termination in April 2018. The witnesses 1. Much of the plaintiff's evidence is uncontroversial. Most of the background facts are not in dispute. The documents speak for themselves. To a large extent, the plaintiff merely sets out the background facts and her own views as to the operation of the STI scheme and LTI plans. She disputes some evidence adduced by Mr Negus, the principal witness on behalf of the defendant. 2. The defendant did not rely on a number of affidavits which it had apparently served and to which the plaintiff responded in her own affidavits. The plaintiff did depose to a number of conversations of relevance to which I will refer later in this judgment. 3. The main areas of cross-examination of the plaintiff related to: 1. her knowledge of the content of the annual reports and the inclusion of the statement that she would be entitled to 3 months' notice on termination; 2. the fact that the draft new contract was never finalised and a challenge to her suggestion, which emerged in cross-examination, that there had been a discussion about 12 months' notice and that the information in the annual reports was inaccurate; 3. her knowledge or acceptance of the statement by senior counsel in opening that the defendant was a top 100 ASX listed company when was she was employed (when in fact it did not become an ASX 100 company until after her employment ceased); 4. whether there was any real change in the nature of her role and duties after she was appointed Finance Director; 5. her search for work; and 6. her motivation in respect of withdrawing the redundancy claim in these proceedings and pursuing the redundancy claim in the Federal Circuit Court, including naming individual directors as defendants. 1. There was an issue in the hearing as to the extent to which evidence of belief, intention and conduct should be admitted, having regard to the principles which must be applied in making findings as to the existence and terms of the contract. Evidence was dealt with on a case-by-case basis having regard to the objections of the parties. 2. Evidence emerged during cross-examination that was plainly not expected by the defendant and might have been included in the plaintiff's affidavits. It was put to the plaintiff during cross-examination that certain discussions of which she gave evidence during cross-examination did not occur. The defendant was given leave to call evidence in response which it did, in part. 3. The plaintiff gave evidence by AVL. There were some difficulties with the technology but it was generally satisfactory. I formed the view that the plaintiff was intent on being considered in her evidence in the sense that she sometimes sought further clarification of the questions and sometimes provided very lengthy answers. 4. I found her to be a credible witness. I do not accept that she was making up any evidence as to conversations. Whilst there are some differences between her recollection of certain conversations and the recollection of witnesses adduced on behalf of the defendant, the differences are not significant. I might also say that, bearing in mind the differences of opinion as to the extent to which evidence of statements and conversations as to contractual terms might be admissible, is not that surprising that some evidence which emerged in cross-examination was not contained in the original affidavits. 5. The principal witness called by the defendant was Mr Warwick Negus. I found aspects of Mr Negus' evidence surprising. He was a member of the Board and Chair of the Remuneration Committee. However, he did not work with the plaintiff and his evidence relating to performance was really a recitation of what he had heard from others. It is unfortunate that the defendant chose to present evidence said to be supportive of shortcomings in the plaintiff's performance in this manner. 6. The Chairman and Managing Director were not called. The defendant obviously made a decision not to call other persons who might have been able to adduce more specific evidence on any performance shortcomings. 7. On a number of occasions, Mr Negus made statements that were not entirely accurate. Indeed, cross-examination commenced with Mr Negus accepting that a statement he made about the decision to terminate was not entirely accurate. 8. He initially said that the plaintiff reported to the managing director when the defendant's own documents specify that she reported directly to the Board. He seemed to be unaware of this. He quite directly rejected the suggestion that she reported to the Board albeit, he accepted that his evidence was inconsistent with the defendant's own documents as to who evaluated the plaintiff's performance. 9. He said that to receive a payment under the STI plan, an individual needs to remain employed by the defendant through the end of the financial year and up to the time of assessment, as if to explain why the plaintiff did not receive any benefit in 2018. He could not identify any document which supported that view. 10. When challenged as to his belief that the plaintiff had not been performing in circumstances in which he had recommended to the shareholders a reappointment to the Board in 2017, he said that it was not her performance as a director but her performance as CFO in which she was failing. Again, there is no evidence from Mr Barlow to this effect and Mr Barlow's assessments against her KPIs do not suggest that he viewed that she was "failing". 11. When pressed on her failings, he admitted that he did not have day-to-day dealings with her and said that the person who was working with her to determine the failings was really the Chief Executive. He acknowledged that Mr Barlow's assessment of the KPI of statutory reporting and market information criteria suggested an improvement in 2017 when compared to 2016. He also agreed that Mr Barlow had given her an "A" in 2017 for general finance function, compared to a "B" for the same KPI in 2016. 12. It is difficult to accept Mr Negus' opinion that the plaintiff was "failing" in her CFO function when the managing director gave her the highest grading possible. 13. When it was put to him that he administered the STI with a large degree of discretion, he said, "No, we communicated very clearly to the employees how it would work." 14. There was no communication to the plaintiff that the entitlement to an STI benefit was entirely at the discretion of the defendant and that she needed to be continuously employed up to the time of the assessment to obtain any STI benefit for the year. 15. Mr Negus maintained that, although payment of the STI was based on financial performance up to the end of the financial year, being 31 July, it was also necessary that the employee be employed at the time of making the decision, that is, after the results are announced and performance would be considered right up to when the Remuneration Committee had its meeting. 16. When originally asked about the ASX announcement on which the Company specified that the plaintiff had resigned, he said that the announcement was made in that way with her knowledge: "It was done with the consent of Melinda and it was specifically worded that way so that it didn't cruel her chances of future employment. It was done to confirm that she had left our organisation." 1. When the subject was again raised with him, presumably after Mr McNally had obtained instructions from the plaintiff, the following exchange occurred: "Q. I want to suggest to you that that is simply not true? A. That's ‑ well she was aware that we were going to say that she had resigned. You know, I don't ever recall seeing an announcement from the company saying that they'd terminated somebody. So it was done with her consent. Q. When you say it was done with her consent, who spoke to her and who obtained that consent to your knowledge? A. I would say that the company secretary would have ‑ would have spoken to her. Q. You would say? Does that mean you don't know if anyone spoke to her about it? A. I ‑ well it was ‑ it was discussed at the time when the ASX announcement was made, that she was aware that we were saying resigned as opposed to terminated. Q. When you say it was discussed that she was aware, how was she aware? A. I think she was made aware by the company secretary. He's responsible for putting announcements out. Q. But you don't know that do you? A. Well it could have been the chief executive. I suspect it was the company secretary. Q. What I want to suggest to you is that nobody from the company to your knowledge contacted Ms Roderick and obtained her consent to the release of that particular piece of information? A. That's not to my knowledge, no." 1. Whilst being cross-examined on the operation of the STI scheme and the possibility of a payment on a pro rata basis, he was taken to the report of the Remuneration Committee in the 2018 Annual Report which included an amount in respect of the plaintiff. 2. That amount obviously represented a pro rata calculation up to the time of her termination. That is, the 2018 Annual Report published well after her termination included a sum for an STI benefit to the plaintiff for 2018 which was obviously not paid to her. Despite Mr Negus being the Chair of the Remuneration Committee at the time and despite him having signed the report, he professed uncertainty as to why the particular number was contained in the report, suggesting that it might be for accounting purposes. 3. Mr Negus was quite adamant that the plaintiff was not entitled to any STI benefit in 2018 because she was not actually employed at the time of the Remuneration Committee's consideration. Yet in the Annual Report for 2018, provision is made for payment of the STI benefit to the plaintiff on a pro rata basis. It is difficult to understand why the defendant would be including an amount representing the amount payable to the defendant if it was sure that she had no entitlement to any payment at all. 4. I accept that Mr Negus had a belief in what he was saying and that he may have had difficulty recalling some of the detail. However, he made a number of statements which are otherwise unsupported or from which he moved away during the course of cross-examination. 5. I prefer the evidence of the plaintiff to the extent that there is any conflict between Mr Negus' recollection and that of the plaintiff as to conversations. 6. The defendant was granted leave to adduce evidence from the company secretary, Mr Ian Bloodworth, in response to evidence from the plaintiff that emerged during cross-examination. One of the key facts relied on by the defendant on objective intention was the presence in the annual reports of a statement that, on termination, the plaintiff would be entitled to three months' notice. The plaintiff said that the inclusion of this statement in the annual reports was incorrect and that she had discussed this with Mr Bloodworth. He was called to refute this but, having regard to his affidavit and his oral evidence, in my view, the differences with the plaintiff are not substantial. Just as she said in cross-examination, she did raise the issue with Mr Bloodworth, although he could not recall it being raised more than once. Evidence about the plaintiff's performance 1. On the defendant's case, the question of the plaintiff's performance as Finance Director is relevant to her entitlement to both the STI and LTI benefits. It is relevant to the STI benefit as, if I accept the plaintiff's submissions, it will be necessary to value the loss of the benefit which depends, in part, on how her performance might have been matched against five KPIs. 2. It is relevant to the LTI claim, as the defendant says that its decision in respect of the forfeiture of the LTI benefits was made, at least in part, with regard to her poor performance. 3. The only evidence relating to poor performance came from Mr Negus. There is no document that makes any reference to "poor performance". Having said that, in its termination letter the defendant specifically stated that the plaintiff was being terminated with immediate effect because "she was not the right fit". The defendant said that it required someone with a different skill set. The defendant did not say in its letter that her termination was related to poor performance. Yet it has presented a case on the basis that it was. Perhaps not being the right fit is code for performing poorly. 4. As I comment when considering the STI claim, there was a difference between the assessment of the plaintiff and the assessment of the managing director, Mr Barlow, when matched against the five KPIs. However, there is no evidence from Mr Barlow, or anyone on behalf of the defendant, raising any performance issue with the plaintiff any time prior to her termination. In 2017, Mr Barlow assessed her performance as an "A" in the very area that Mr Negus volunteered she was "failing". 5. The plaintiff says that she specifically asked whether her termination was based on performance and was told that she had done nothing wrong: "On 12 April 2018 I was summonsed to a meeting with [Robert] Millner; Warwick Negus … Chairman of the Board's Remuneration Committee; and [Todd] Barlow. A conversation to the following effect took place: Millner: 'Melinda, your services are no longer required by the company, and you are being terminated effective today.' Me: 'What?' Millner then repeated the substance of what he had said to me. I then asked: Me: 'Is this some performance based decision?' Barlow: 'No, you've done nothing wrong.' Negus: 'It's something that's been happening for a while.'" [5] 1. The person who is said to have made that statement, being Mr Barlow, was not called. No explanation was offered as to why he was not called. In accordance with Jones v Dunkel, [6] I would merely infer that his evidence would not have made the defendant's case any better. 2. Instead, the defendant relied on Mr Negus who was present during the short termination meeting. 3. He gave relevant evidence on the performance issue in three different respects. Firstly, he stated in para 6 of his affidavit of 28 August 2019 the following, in relation to his meetings with Mr Barlow: "From time to time, these discussions naturally include the performance of key personnel, so I was aware that since commencing as Chief Executive Officer in April 2015, Mr Barlow had developed concerns about the plaintiff's ability to adequately perform her role." 1. This evidence and the more detailed evidence in para 7 of that affidavit was admitted only as to his belief, not as the truth of the fact. 2. Secondly, Mr Negus disputed the plaintiff's version of the termination conversation in his affidavit of 28 August 2019 as follows: "12. I have read the affidavit of the plaintiff dated 23 November 2018 (Plaintiff's First Affidavit), including its description of the events of 12 April 2018 at paragraphs 43 to 46. The plaintiff's description of these events is not accurate. 13. After being told that the defendant had decided to terminate her employment, the plaintiff asked whether this decision was related to her recent sick leave. Mr Barlow made it clear to the plaintiff that the decision had nothing to do with her illness or absence from work and he confirmed that the decision related to her performance. 14. Paragraph 43 of the Plaintiff's First Affidavit refers to me telling the plaintiff that 'It's something that's been happening for a while.' This is accurate. …" 1. It is difficult to know what to make of Mr Negus's statement that Mr Barlow confirmed that the decision related to her performance when there is no evidence of any earlier discussion with the plaintiff about poor performance or that she might be terminated based on performance. 2. Thirdly, Mr Negus refers to his discussions with Mr Barlow regarding the plaintiff's self-assessment for the purposes of the STI plan. He says that there was a substantial disparity between the plaintiff's assessment and Mr Barlow's assessment. He says that he discussed these disparities when reviewing the plaintiff's performance and considering the STI payment. 3. Mr Negus also said that it was customary for the Board to have conversations about staff at the start of the Board meeting so the only people not present would have been the plaintiff and the company secretary. He referred to comments made by the chairman and the fact that these discussions took place on a number of occasions. He also referred to the discussion that he says took place during the meeting of the Remuneration Committee on 12 September 2018. He says there was a discussion about the nature of the plaintiff's termination and the reasons why she was terminated. 4. The plaintiff responded to Mr Negus' evidence in her affidavit of 30 September 2019 as follows: "9. In response to paragraph 19 of the Negus Affidavit, I was never aware that Mr Barlow had assessed my performance. I would not expect Mr Barlow to assess my performance as I reported to the Board. 10. In response to paragraph 19 of the Negus Affidavit, at no stage whilst I was employed as the Finance Director did Mr Barlow or any other Board member provide me with key performance indicators or key performance objectives." 1. She was not challenged on this evidence during cross-examination. 2. I prefer the evidence of the plaintiff to the extent that there is any conflict between Mr Negus's recollection and that of the plaintiff as to conversations. 3. I accept that the plaintiff was not informed that her employment was being terminated for performance-related issues. There is no evidence of performance issues being raised with her prior to that time. The termination letter does not refer to poor performance. 4. On the defendant's case, it was having discussions about the performance of its second most senior employee over a lengthy period without raising them with her, until she was terminated without notice and asked to leave the premises immediately. 5. Of course, there may have been discussions about her performance held in confidence. It may be that the defendant considered that it could do better or that the plaintiff was not the right fit and that it could do better in terms of value for its money. After all, it had obviously gone on to hire a person to act only as CFO for considerably less than it was paying the plaintiff (particularly having regard to her claimed STI and LTI benefits). That person reported directly to the CEO and was not on the Board. The defendant's actions in terminating the plaintiff at the time that it did and in the manner that it did would have saved the defendant a considerable sum. 6. Mr Negus's statement that the plaintiff was failing in her CFO duties is not supported by the assessment undertaken by Mr Barlow in 2017. It is one thing to consider that the company could do better or there were aspects of performance that could be improved but the assertion that she was failing in her duties is not supported by any other evidence and the documentary evidence is to the contrary. According to the defendant's published methodology for assessing the entitlement to an STI benefit, a grade of D represents underperformance. The plaintiff did not receive even one D in the years that she was assessed for an STI benefit. 7. There may have been confidential discussions as to the plaintiff's performance but they did not involve the plaintiff. 8. I accept that Mr Negus was really giving evidence based on what he understood from other persons but, when tested, his recollection of detail was lacking and inconsistent. 9. Further, on a close analysis of the whole of Mr Negus's evidence, he makes no direct and specific statement that the plaintiff's entitlement to an STI benefit was actually discussed at the meeting of the Remuneration Committee on 12 September 2018. There is no mention of it in the minutes. He only refers to the STI benefit in his affidavit of 28 August 2019 as follows: "22. The defendant did not make any payment to the plaintiff on the termination of her employment in relation to the STI plan for the 2018 financial year. Tab 3 of WMN1 contains a copy of Mr Barlow's Remuneration Overview 2018. I read this document before attending the Remuneration Committee meeting on 12 September 2018. Tab 4 of WMN1 contains a copy of the minutes of the Remuneration Committee. I attended and chaired that meeting." 1. He does not say that there was any consideration or recommendation in respect of the plaintiff's entitlement. Of course, the copy of the minutes presented to the Court is redacted. 2. The meeting was raised in further examination-in-chief as follows: "Q. I just want to ask you about a different meeting, on 12 September 2018, you were the chairman of the remuneration committee; do you recall that? A. I do. Q. And the subject of Ms Roderick's LTIs and STIs was discussed; do you recall that? A. I do. Q. Just doing the best you can, can you just tell his Honour who said what? A. So, when I chaired REM committee, we worked with an agenda and I would normally introduce the subject and talk to the subjects, issues that I thought were relevant and then I would open it up for discussion. On the subject of LTIs there were two decisions to make, one in relation to the 2018 LTIs. And one in relation to the 16 and 17 LTIs. So, the decision on the 18th, the 2018s was the pro rata decision and then on the 16 and 17s was the decision to forfeit the performance rights. Q. And can you remember what was said about the reasons if any for that decision? A. This meeting was, first of all, it was five months after the termination date, so Melinda had not been working in the company for some time. We discussed the nature of her exit from the company, the reasons why she was terminated. We talked about the objectives of the plan which was long term and continued contribution to the success of the company. We would have discussed what we felt was a generous remuneration package. And of course the, you know, the service condition on the plan itself, so, those, they were the things that we discussed and that led to the recommendation to forfeit the rights. Q. Can I just ask you to take up Court book volume 3 and on the top right hand corner, you'll have page 930 and can I just ask you to identify those as the minutes of the meeting that you were the chairman of, that you've just spoken about? A. Yes, it is. Q. And just going through to 933, where it's other business, do you see a heading "Melinda Roderick LTI rights"? A. Yes. Q. And was that ..(not transcribable).. the ultimate decision made following the discussion you've just referred to A. Yes, that's that's where the discussion took place. There's a redaction in my copy of that. Q. Thank you. And can I just ask you about a separate meeting and maybe to do this by looking over to the next page. HIS HONOUR: Sorry, do you say there is – sorry, Mr Sulan. Q. Mr Negus, did you say there's a correction in your copy or a redaction in your copy? A. A redaction, your Honour. SULAN Q. And just if you go over to page 934 and do you see that this is the minutes of a board meeting also of the same date? A. Yes. Q. And can I just ask you to look at 935. A. Yes. Q. Can you just explain to his Honour what discussion, if any, took place at that board meeting regarding these issues? A. So – so the membership of the REM committee and the membership of the board was the same group of people, so we would have closed the remuneration committee and the chairman would have opened the next committee immediately following, and we would have formally adopted the recommendations from the remuneration committee. So I don't – I don't believe that there were any – there was any further discussion because it was the same group of people." 1. As is plain from his answer, he specifically only referred to the LTI plan. He did not add to this in any answers he gave in cross-examination. 2. I accept that there were confidential discussions about the plaintiff. I accept that there must have been discussions about her performance, but I do not accept that she was failing or that her performance was poor. Having regard to some inaccurate statements by Mr Negus, which I assume were inadvertent, I am not prepared to make findings based on his recollection of conversations with others about the plaintiff. Indeed, I specifically limited some of his evidence, such that it could not be used to prove the truth of that which he asserted. 3. In circumstances in which the defendant was making a decision about payment of STI benefits to the plaintiff two months after she had commenced these proceedings, when (as it contends) it viewed her performance as having been poor, I can think of no explanation as to why there would not have been a minute recording the decision and that it was based on poor performance. Original or new contract? 1. The central issue is whether, as at the date of termination, the parties remained bound by the original contract, perhaps as varied, or whether that contract had been discharged and the relationship was governed by a new or different contract, albeit not yet in writing. 2. The plaintiff submits that her role and duties had changed to such an extent that the original contract should be taken as discharged and that the employment relationship was governed by a new contract. [7] 3. The plaintiff submits that the parties demonstrated an intention to enter into a new contract of employment, commencing at the date of her appointment as Finance Director. The plaintiff relies on the conversations and correspondence between the parties as supporting her position. 4. The plaintiff submits that the fact that the draft new contract in writing had not yet been executed does not lead to the conclusion that the original contract still applied. The plaintiff also points to the significant change in her remuneration structure as supporting her position. 5. The defendant submits that the parties remained bound by the original contract, the draft provided to the plaintiff not having been agreed. The defendant points primarily to the content of the annual reports and the existence of the unsigned or draft executive agreement as evidence of common intention that the original agreement applied. The defendant says also that the plaintiff's evidence as to change in her executive function was limited, bearing in mind that she was appointed a director pursuant to a separate letter without remuneration. Her new duties were said to be a function of her being appointed a director and thus would not be relevant to the enquiry in this case. 6. It could hardly be disputed that the defendant intended that there would be a new contract of employment. It sent one to the plaintiff for signing. It must follow that on the defendant's case, the parties demonstrated by their conduct an intention to remain bound by the original contract, until such time as they executed a new contract. 7. If the parties remained bound by the original contract then there could be no scope for the implication of a term as to reasonable notice. The original contract contained an express term as to notice and there is no scope for implying a term inconsistent with the express term of the contract. 8. In Westpac Banking Corporation v Wittenberg, [8] Buchanan J conveniently identified the task in a case such as this as follows: "[257] The search, accordingly, in a case where it is said that a contract of employment has been replaced in an ongoing relationship of employment (or even that its terms have been varied), is for an imputed mutual intention that such a change in the contractual landscape has occurred." (Emphasis in original.) 1. The defendant made the following submission in respect of the correct approach to the determination of the issues: "Second, the relevant mutual intention may be found in the objective intention attributed to the parties by reference to their conduct. This reflects the general principle that extrinsic evidence of post-contractual conduct is admissible to establish the fact that a contract was entered into, or that an existing contract has been varied or abandoned. What is required is an objective assessment of the state of affairs between the parties, with the word 'intention' used to describe what would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened." (Emphasis in original.) (Citations omitted.) 1. I accept that submission as to the principles to be applied. I am required to assess the state of affairs between the parties on an objective basis having regard to their words and conduct and the circumstances existing at the time. 2. It is accepted by the defendant that the original contract did not contain a payment in lieu of notice ("PILON") term and there is no scope for implying such a term into the original contract. 3. The common law does not afford a right to terminate a contract of employment on payment in lieu of reasonable notice. [9] The positon in this matter is analogous to the position best summarised in Sanders v Snell, [10] as follows: "[16] … The contract being cast in these terms, it is not possible to imply in it some term that would permit … payment to the respondent in lieu of notice … … [19] … That termination was a breach of the contract, for it brought the contract to an end then and there, without first giving the stipulated notice. This was not a case of an employer giving notice of intention to terminate the contract in two months, paying the employee in advance for those two months and saying to the employee that he or she need not attend work during that time. The payment that was made to the respondent was payment in lieu of notice in the sense of being a payment made after the contract was brought to an end and intended to be set off against, and to extinguish, the damages that ordinarily would be payable for the wrongful termination of the agreement." (Citations omitted.) 1. There is no dispute that, if the original contract was discharged or replaced, then it would be necessary to imply a term into the new contract to the effect that the contract is terminable upon reasonable notice. [11] 2. The employment relationship commenced in 2006. That relationship continued after the plaintiff was appointed Finance Director in 2014. It has often been stated that the Court should not readily assume that a change in working arrangements or in the duties of an employee involves either a variation to or discharge of an existing contract of employment. [12] 3. In Wittenberg, Buchanan J said at [261]: "[261] Whether changes occur incrementally and slowly, or more rapidly pursuant to an intended program of development and expansion, unless it can be said that an employer has breached a contract by an unjustified and unlawful attempt to impose change (in which case the employee has the normal remedies for breach or repudiation) it would not be readily inferred, in my view, that the entire contract of employment has been replaced by a new one. In the case of a comprehensive written contract dealing with a range of important matters, including but by no means confined to, methods and occasions for termination of the contract, that could have drastic and potentially damaging results for both parties. Such an intention should not lightly be imputed to them in a continuing relationship." 1. On the other hand, if the circumstances demonstrate a profound alteration in the duties and responsibilities of the employee, the Court may more readily accept that a new contract replaced the old contract. [13] 2. As observed by Ashley J in Quinn v Jack Chia (Australia) Ltd: "The passage highlights what seems to me to be a valid point — that where employer and employee agree to an alteration in the employee's duties and responsibilities which is profound, a court should be more ready to hold (unless the original contract of employment provided for the contingency) that a new contract has replaced the old; or at least that the old contract, as varied, contained terms objectively appropriate to the new relationship created." [14] 1. It seems to me to be significant that in a number of cases relied upon there was a term in the written contract specifying that the contract would remain in force even after a change in duties. 2. The original contract in this matter contained no such term. Indeed, it is relevant that the original contract was a short-form standard contract which did not contain many of the terms which might have been expected in an employment contact for an executive director of a large public company. 3. I do not consider that the approach in Quinn establishes some new principle or is unique to its facts. In reality, Quinn is just an example of a case in which the facts and circumstances, assessed objectively, demonstrated a common intention that the old contract would no longer apply. As the change in duties was far reaching and not contemplated by the contract originally made, the parties could not have intended that the old contract still applied. 4. In Tallerman and Company Proprietary Limited v Nathan's Merchandise (Victoria) Proprietary Limited, [15] Tayor J said: "It is firmly established by a long line of cases ... that the parties to an agreement may vary some of its terms by a subsequent agreement. They may, of course, rescind the earlier agreement altogether, and this may be done either expressly or by implication, but the determining factor must always be the intention of the parties as disclosed by the later agreement." 1. The question is what the parties intended on an objective basis. [16] 2. There are limitations on the use to which post-contractual conduct can be put. It cannot be used to as an aid to interpretation of a particular term. However, post-contractual conduct may be used to demonstrate that the parties intended that a contract had been discharged and replaced by a new contract. 3. Ultimately, whether the parties intended to enter into a new contract is a question of fact. 4. There is no statement, oral or in writing, that on commencement of her new role she would no longer be bound by the original contract. However, there is a statement by the defendant, assented to by the plaintiff, to the effect that there would be a new employment contract. [17] 5. The plaintiff submits that common intention that the original contract would be discharged is demonstrated through the following evidence. 6. In October 2014, she had a conversation with Mr Robinson, then the Executive Director, in the following terms: "Robinson: 'With your new role as Finance Director I have asked David Wills to draft a new executive director employment contract for you'. Me: 'Thank you'. Robinson: 'I have also spoken to the Chairman and agreed with him that it is now appropriate in your new role that you will report directly to the Board.' 1. This conversation took place before she commenced her duties as Finance Director on 1 November 2014. That is she was told, with the new role, there would be a new executive director employment contract. Her response indicates her assent to this. 2. That conversation alone tends to set this matter apart from some of the cases relied on by the parties. It must be that the mutual intention of the parties as expressed in that conversation was that with the new role came a new employment contract. 3. In any event, the plaintiff relies on further evidence. 4. The 2014 annual report contained a reference to her appointment as follows: "Ms. Melinda Roderick will join the Board on 1 November 2014 as a Finance Director. Melinda has over 24 years [sic] accounting and operational experience having previously held senior financial roles within the financial services and insurance sectors including eight years as an external auditor within a chartered accounting practice. She joined WHSP in 2006 as Chief Financial Officer and has a comprehensive understanding of the Company's complex accounting matters. In this role she has provided valuable input to the Board." 1. She received a letter dated 27 October 2014 regarding her appointment to the Board. It is not suggested by either party that that letter constitutes her contract of employment. 2. Then in early 2015 she was provided with a draft executive employment agreement. It had been prepared by solicitors engaged by the defendant. It was a much more lengthy and complex document than the original contract. 3. Recital B to the draft agreement is as follows: "The Company wishes to enter a new arrangement with the Executive, and the parties have agreed that their mutual rights and obligations and the terms and conditions of the Executive's employment with the Company shall be in accordance with this Agreement." (Emphasis added.) 1. It does not seem to me that there could be any doubt that the parties intended that the original contract would be replaced by a new contract. The defendant's case could only be that, as that new agreement was never signed, that never happened and the parties remained bound by the original contract. 2. In this regard, the defendant points principally to the continuing reference in the annual reports to the plaintiff's period of notice of termination being three months. As the new draft specified six months, this could only be a reference to a period specified in the original contract, rather than any new agreement. It must be that the plaintiff was aware of this reference in each of the annual reports and consented to its inclusion. The defendant relies on this conduct as consistent with the mutual intention of the parties to remain bound by the original contract. 3. This point was taken up with the plaintiff in cross-examination: 1. She accepted that the reference to three months in the 2013 report (prior to her appointment as Finance Director) reflected her understanding of her contractual entitlement at the time. 2. She acknowledged the reference to six months in the new draft but said that there had also been discussions about 12 months. This was not contained in her affidavits and it was put to her that the discussions did not take place, which she rejected. 3. She rejected the proposition that the reference in the 2015 annual report (and later reports) to three months' notice of termination was consistent with her understanding of her contractual entitlement at the time of the reports. 4. She said that there was a discussion with Mr Bloodworth before she signed the report to the effect that this was incorrect. 5. She said that she asked for it to be changed. It was put to her that there was no such discussion, although that positive proposition was subsequently withdrawn. 1. The cross-examination ultimately came to this: "Q: It's more likely, isn't it, that this report reflected the understanding of each of the parties, namely that – sorry, your understanding at least that there was in fact a three month notice period that had continued to apply to your contractual term? A: No. I asked for this again to be changed. I can recall a late meeting in the office and Ian saying da-da-da and I said, "No, that needs to be changed. You need to change that." And his response was he will check with Todd. He came back and said, "We can't change it again because there's nothing signed. David hasn't completed." Q: Did you put this in writing at all? A: No." 1. I granted leave to the defendant to adduce evidence in response and the defendant adduced evidence from Mr Bloodworth, the Company Secretary. In paras 4 and 5 of his affidavit of 5 May 2020 he states: "4. The only conversation I recall having with the plaintiff (Melinda) about her notice period as recorded in those reports was a comment by her to the effect that her new draft contract provided for a six-month notice period. To the best of my recollection, the conversation was to the following effect: Melinda: 'My new contract has a six-month notice period.' Me: 'Have you signed it yet?' Melinda: 'No, David Willis hasn't followed me up.' Me: 'If you haven't signed it, we can't put it in. It's not the standing contract.' 5. I only recall a conversation to this effect occurring once around a week before the release of the relevant report. I do not recall which year this occurred in. It could have been in 2015 or 2016." 1. Mr Bloodworth was cross-examined on this topic. The effect of Mr Bloodworth's evidence after cross-examination is that: 1. he agreed that the plaintiff did approach him and have a conversation with him about the three-month notice period statement in at least one annual report; 2. he agreed that she was suggesting that the period should be greater because it was six months in the draft; 3. he agreed that he had told her that it had to remain at three months in the report as she had not signed the new contract; 4. he agreed that if she had approached him again on the same topic he would have given her the same answer; and 5. he agreed that although he did not recall any further discussions on the topic it was possible as he worked closely with the plaintiff that and she could easily have said something about it as he walked past her office or whilst having coffee. 1. Mr Bloodworth's evidence on this topic ended up being more consistent than inconsistent with the plaintiff's evidence. 2. In the circumstances, the reference in the annual reports to the termination period being three months is not subsequent conduct which would demonstrate the mutual intention of the parties that they remained bound by the original contract. 3. Mr Bloodworth's belief that the original contract stood because the new one had not been signed is irrelevant to the issues other than as an explanation as to why the annual reports still contained the reference to three months' notice. 4. The original contract was evidenced by a simple document. It did not contain a number of the terms set out in the draft new contract. That is presumably why the defendant engaged its solicitors to draft a more extensive document. I would infer that, with the plaintiff's appointment as Finance Director, a new more extensive contract was required as a reflection of her increased responsibility. 5. Other than the reference in the annual reports to the three-month period of notice, there is no evidence that the parties intended to be bound by the original contract until the new one was signed. Of course, the defendant did not, by its conduct on termination, demonstrate an intention to be bound by the original contract because it did not give the plaintiff three months' notice. 6. Nor would I have regard to the defendant's self-serving statements in its termination letter. Some of the post-termination documentation identifies the plaintiff as the Finance Director and CFO, as if the former title was merely a reflection of her position on the Board. 7. Further, on the defendant's own case, there was no PILON clause. Its statement to that effect in the termination letter was incorrect. I would not infer that payment of three months' salary and acceptance of the money after this case commenced was evidence of common intention. Indeed, the failure to give notice in accordance with the original contract might be viewed as inconsistent with the proposition that the parties remained bound by the original contract. It may be difficult to accept that the defendant demonstrated an intention to remain bound by the original contract by not complying with it. 8. This is not an exercise in semantics. The reason that employment contracts contain notice provisions is to afford each party to the contract an opportunity to reorganise their affairs and find a replacement job or replacement employee in the interim. It is an unfortunate consequence of termination without notice that the employee is left to look for a new job whilst unemployed and seemingly unable to explain why she was terminated in such a manner. 9. Finally, changes to her duties and role commenced immediately on her appointment. Her salary and responsibilities were increased. On the defendant's case, even though the plaintiff was told that with the new job there would be a new contract, three years later she was still working under the old contract, which did not contain many of the terms that I infer the defendant considered important having regard to her new role. The fact that after the plaintiff was told that there would be a new contract (to which she agreed) the parties continued in their relationship for such a lengthy period tends to support the proposition that it was their common intention that the original contract no longer applied. 10. All of these factors tend to suggest that on appointment (that is, on acceptance of the offer made to her) the parties intended that the terms and conditions of her employment would no longer be as set out in the original contract but be governed by a new contract, that is, an executive contract, as Mr Robinson described it. 11. The fact that the draft document was never signed is not evidence that the mutual intention of the parties was that they would remain bound by the original contract until it was. Indeed, the fact that the defendant told the plaintiff that with her new position there would be a new contract and then sent her a new proposed contract demonstrates that which was discussed between the parties. Nor does it seem to me that the failure to sign the new agreement evidenced a common intention to remain bound by the old agreement. 12. Adopting the words of Buchanan J in Wittenberg, all of these matters point to a change in the contractual landscape. As there was no written agreement governing the parties rights on termination it would be necessary to imply terms. It is not necessary to further consider all the terms that might have been implied. The parties agree that there would be an implied term that the defendant must give reasonable notice. 13. Further the evidence as to the change in duties also tends to support the view that the parties were no longer bound by the original contract, consistent with Quinn. 14. The evidence as to the change of the employment derives from the affidavits of the plaintiff, the documents and her oral evidence, as well as admissions said to have been made by Mr Negus. 15. In her affidavit of 17 April 2020, the plaintiff provided details as to the changes in her role, which included: 1. Attendance at all Board meetings. 2. Receipt of a Board pack before the Board meeting which required her to read the documentation and make enquiries as she saw fit. The Board pack included reports on the defendant's company operations and those of their subsidiary companies, including: 1. investment committee recommendations; 2. remuneration committee recommendations and reviews; 3. potential acquisitions; 4. property portfolio reports; 5. work health and safety reports and reviews; 6. compliance issues; 7. minutes of previous meetings for approval; and 8. risk management report for all company and subsidiary issues. 1. Membership of the Board's Risk Committee with attendance on all Risk Committee meetings including development of risk and compliance framework for head office operations. 2. Change of line of reporting, that is, reporting directly to the Board. 3. Additional duties which are summarised by the plaintiff as follows: 1. I was appointed to several Boards of operating subsidiaries (100% owned and less than 100% owned) and Trustee Boards for property and property joint ventures. In all instances, I was appointed as a representative of the defendant. 2. I became privy to highly sensitive market information and participated in discussions regarding the defendant's activities and investments. The defendant has and often establishes major holdings (controlling or influencing stakes with board representation) in companies, including other ASX Listed entities. 3. I took the lead for the defendant in the strategy to implement a comprehensive risk management assessment and develop an ongoing plan to deal with a major electrical hazard in the Head Office building to ensure compliance with building codes for safety, fire, security and maintenance, to ensure a safe working environment for staff and customers was in place. This work and responsibility for the office Premises, was outside of my role as a CFO. 4. I undertook a strategic role with regard to IT infrastructure and undertook risk assessment and oversaw the design and implementation of the head office 'move to the Cloud' environment so as to remove risk from head office operation. 1. During cross-examination, the plaintiff was asked to describe what her major role and functions were before she was appointed a director in November 2014. She answered: "A. So my major role was there to look after the financial operations of the company, major things that involved preparation of monthly accounts and presenting those at board meetings. A big part of my role was to do the statutory financial reporting twice a year and overseeing that, so that includes the half year and the full financial year. I looked after treasury and the day‑to‑day financials, the repayments involved also for pharmacy functions and the day‑to‑day functions of ..(not transcribable).. the finance ..(not transcribable).. Q. And ‑ sorry, I didn't mean to cut you off but is that the complete list of the major roles? I am not suggesting you should identify every task but just the major roles or functions that you were performing? A. Well, I was ‑ I was looking after the management of the finance functions for Soul Pattinson's. Q. And after you were appointed a director, did you continue to perform those functions; correct? A. In my new role I continued to perform those functions together with staff and took on additional responsibilities as a director. Q. Well, I am going to come to that but can I just get you to confirm that following your appointment as a director in November 2014 that the major tasks that you have just identified that you were performing before that time continued to be tasks you performed after that time? A. The tasks I performed and some staff ‑ that's correct. In my responsibilities, correct." 1. She was then asked to put aside her role as a director and identify any tasks for roles that she was performing, following her appointment as a director, which were different to that. She explained: "A. Yes. On a day‑to‑day basis when I came into the office, I was an executive director so no longer was I just the management of the company, I was executive director which means anything that came to light across the whole of the organisation, it was just ‑ not just the finance function I need to be across and I needed to look at risks of it or is it work health and safety issue, and do something about that. So when you come into the office every day, you're an executive director as well so you don't just switch off that function; you have to do the day‑to‑day of the management and then also turn your mind to look at the ‑ what you are as a director which is across the whole organisation not just things that are just within the finance function." 1. She was then asked to be more specific. There followed a number of lengthy answers. She referred to having to deal with work, health and safety issues and used the example of a major cable that was on fire in the building. 2. She then compared her role at Board meetings in the sense that in her prior role as CFO, she had been invited to attend Board meetings and was to later answer any questions that the directors may have. She would be excused after answering questions in her area. Once she was appointed finance director, she was required to consider major investments to be used in many listed organisations and unlisted organisations. Previously, she was not privy to those sensitive commercial discussions. She was not required to consider divestments or investments or make decisions about those matters. 3. She was previously not involved in conversations and receipt of information around the investments in other listed companies. She did not attend at such meetings. She gave specific examples of how her role had changed. Then ensued the following exchange: "Q. So the various tasks that you've just referred to as being the main tasks before you were appointed a director in 2014 continued to be tasks that you performed after you were a director. Correct? A. Those tasks, correct. Q. And your role changed, that's your evidence, correct? A. Correct. Q. The points that you make about your role changing include your sitting on the board and being part of all board meetings rather than part of board meetings, correct? A. Yes. Q. And also being privy to particular financial information that you might not have been prior to being appointed a director, correct? A. Yes. Q. Also sitting on committees that you hadn't previously sat on including the risk committee. Correct? A. Risk committee, yes and other boards. Q. And insofar as you had a change to what might be termed a day to day role or an executive function, you pointed to the work health safety issue that you dealt with with the main cable that was a problem in the offices, correct? A. Yes. Q. I've asked you whether or not you can point to any other specific role or task that you performed beyond the point in time that you became a director which differed from that which occurred before you were a director, and I'm inviting you to offer to the Court any other examples like the fire, health and safety issues?" 1. Suffice to say that the answer given to that last question was extensive. It included: 1. taking on a strategic role in respect of the IT platforms for the whole of the building; 2. implementation of the strategy; 3. considering the investments platforms to see if they could get a better IT platform; and 4. considering things on a day-to-day basis from the executive director's position. 1. She continued: "So I think the best way to describe it, Mr Sulan, is that in my role as CFO I was management. In my role as a director, in the new role as finance director, it is a decision making role and a governance role. It takes on the roles, responsibilities, duties and liabilities of a full director. I wasn't just a director of finance. Even though it was called a finance director I was a full director of the board and that includes every ‑ all of the responsibilities across that organisation, not just of the finance function. As an executive director every day I was responsible for anything to do with risk, work health and safety, to that regard. So if there was an issue in the building ‑ there was a ‑ and these don't come up every day but you need to be in a mindset of every day because now you are director. You're an executive director. You see what happens every day and you're in the role of governance for that company. So we had allegations of bullying and we looked at that straightaway because that's essential. Security for the building. Risk management of the building. De‑risking and mitigating the risks for the directors of the building. Just because there was a cable that was burning, and I mean not just a small cable, I'm taking something that is ‑ is about ‑ thicker than your thumb, it's a major cable in the building." 1. She continued to identify areas in which her role had changed or her responsibilities had increased. She emphasised the governance and strategic role she was required to take. 2. A difficulty arose during cross-examination because the cross-examiner attempted to summarise the rather lengthy answers. The plaintiff generally disagreed with the summaries as being too simplistic. 3. It is not necessary, in this judgment, to merely recite everything said by the plaintiff but the thrust of the answers, including specific examples, was that in her new role, the plaintiff was required to undertake governance, management, strategic and policy roles across a range of areas. She was placed in the role of a decision-maker, rather than someone who was provided with information and asked to obtain information in response. 4. Despite the defendant's submissions to the contrary, it is difficult to escape the conclusion that the plaintiff's evidence as to the change in her role is consistent with that which she was told on her appointment, that is, that she was being given a new role. It was an executive director position. 5. There were only two executive directors, being the plaintiff and the CEO. On any view, it was an upgrade in her position. Whilst the defendant maintained that some distinction should be drawn between her director's duties and her employment duties, she was an executive director. The responsibilities that attached to that role were significant. The plaintiff referred to the observations of Middleton J in ASIC v Healy [18] but it is hardly necessary to comment further on the responsibilities of a director of such a large and diverse organisation. 6. It ultimately led to a potential doubling of her remuneration, having regard to her participation in the STI scheme and LTI plans. Again, it is perhaps difficult to understand why the plaintiff's remuneration was so substantially increased if, as the defendant submits, the change was more descriptive than real. 7. Mr Negus was cross-examined about the responsibilities of an Executive Director. He disagreed that the change in role was ceremonial. The following exchange took place: "Q. Yes. Now, can I ask you some questions in relation to the governance of the defendant. Now, as you understand it, the plaintiff was initially appointed as chief financial officer of the defendant, wasn't she? A. She was. Q. And then in late 2014 she was appointed as finance director of the company. A. Yes. Q. Now, you've been a director since November 2014 of this company, haven't you? A. I have. Q. So you have an understanding, and I would suggest to you a good understanding of what the roles of a director of a company such as the defendant are. A. Yes. Q. And you have a good understanding as to what the obligations of a director are? A. Yes. Q. And those obligations and responsibilities could be described as onerous, could they not? A. At times. Q. Yes. And you appreciate that there is a real difference between someone being a chief financial officer of a company and becoming a finance director of that same company, don't you? A. Yes. Q. And that difference relates to the fact that as an executive director, they have significant responsibilities in relation to the governance of the corporation, don't they? A. A director has significant responsibilities. Q. And those are responsibilities that need to be taken very seriously, aren't they? A. Yes." 1. The parties relied on a number of cases supporting their positions in relation to the significance of any change in role. 2. The defendant placed reliance on Spartalis v BMD Constructions Pty Ltd. [19] 3. In Spartalis, the appellant's employment had been terminated by the respondent, a construction company. It entered into a written contract in 2003 on commencement of employment. In 2005, his title changed to National Manager Business and Finance and his responsibility for construction projects increased. His base salary increased. 4. The Court rejected the proposition that the changes made to the employment arrangements and duties he was required to perform were so profound as to lead to a clear inference that the original contract had been brought to an end and a new contract had been created. It held that the parties had not entered into a new employment contract and the relationship was still governed by the original 2003 contract. 5. However, it is notable that there was no written contract, letter of offer or any other documentation prepared to give effect to the employee's suggested promotion and new contract. [20] The Court in Spartalis stated at [26]: "[26] A court should not too readily find that a change in working arrangements or in the duties of an employee entails either a variation to an existing contract or the making of a new contract. If the original agreement gives the employer the right to make the changes that have occurred, there will be neither a variation of contract nor a new contract." 1. Importantly, in Spartalis, the original contract contained a term that the employee may be required to perform other tasks that were not included in his position description. Such a term may provide an employer with substantial flexibility, provided that the alternative duties are not fundamentally incompatible with those which the employee had been engaged to perform. [21] 2. Ultimately, the Court accepted that the changes that occurred were well within the scope of the broadly expressed position description and did not take his duties beyond the scope that he had been engaged to perform. They were not so substantial so as to suggest there must have been a new contract. 3. Unlike in Spartalis, the original contract in this matter does not contain any reference to the right to make changes to the duties of the employee. 4. In Wittenberg, the plaintiff maintained that as a result of a change in his duties, his written contract had been discharged. He contended that the term relating to notice had been replaced with an implied term that the contract could only be terminated on reasonable notice. He commenced employment in 2006 as head of a division. His title did not change during his employment although his duties expanded and he took on extra responsibility prior to his employment being terminated in 2009. 5. Again, unlike this matter, his service agreement stipulated that his duties or position could be changed and were to be as directed by his employer. He was told, on commencement of employment, that there could be changes to his role. In the circumstances, the mere change in duties was not sufficient to discharge the existing contract. In Wittenberg at [286], Buchanan J made the fundamental finding of fact as follows: "More fundamentally, however, I see no reason to conclude that any alteration to particular duties fell outside the scope of the service agreement in any respect." 1. I would not make the same finding in this matter. There is nothing in the original contract which would suggest that the duties of the plaintiff as Finance Director fell within the scope of the original contract. 2. The original contract was a short-form contract. It did not contain many of the terms that would have been appropriate to an executive director position, such as were found in the draft new written contract and as might have been implied into the employment agreement absent express agreement. It did not contain a term specifying that it remained applicable even on a change of duties. She was told there would be new employment contract with the new job. Her response indicated her assent to that. 3. The plaintiff's duties and responsibilities then changed on her appointment. Whilst she retained her duties as CFO, there was a significant increase in her responsibilities. She became a director of 12 companies, including the defendant, a company with assets of a billion dollars. With that came significant legal responsibility and potential liabilities. I reject what appears to be the defendant's case that I should limit the consideration to what she did in her CFO role and that the change in job description was not of any significance. 4. In my view, the parties intended that on her appointment as Finance Director, the plaintiff's employment would be governed by a new contract and the original contract would no longer apply. Having rejected the annual reports as evidence of common intention, there is little to suggest that the mutual intention of the parties was that they would remain bound by the original contract until the plaintiff signed a new one. 5. In the circumstances, at the time of her purported termination, the original contract no longer governed the employment relationship. As accepted by the parties, it would thus be necessary to imply a term as to reasonable notice into the employment contract. Reasonable notice 1. It is accepted that determination of a reasonable period of notice is a question of fact. The period of reasonable notice must be determined as at the date notice should have been given. As observed by Gillard J in Rankin v Marine Power International Pty Ltd, [22] it must be borne in mind that the primary purpose of giving a period of notice is to enable the employee to obtain new employment of a similar nature. Those at the top of their chosen fields have fewer opportunities to obtain similar employment. In Rankin, it was suggested that the period of notice in those circumstances is usually many months to in excess of a year. 2. There is no restriction or limitation on the circumstances to be taken account of in determining the period of reasonable notice. Again, in Rankin at [223], Gillard J said: "[223] … The factors include the high grade of the appointment, the importance of the position and the size of the salary. Further, it is clear that the nature of the employment is a relevant factor. In addition, factors which pertain to the particular employee which are relevant are the length of service, his professional standing and his age, his qualifications and experience, and the expected period of time it would take for him to find alternative employment." 1. The plaintiff identified a number of factors which she submits should lead to an extensive period of notice of up to 24 months. The defendant accepted the factors as identified by the plaintiff could be relevant but pointed to a number of comparable cases said to be analogous in which the notice period was less than a year. The defendant also disputed the factual propositions advanced by the plaintiff including the erroneous submission made at the outset that the plaintiff was a finance director of a top 100 ASX-listed company. That submission was made in error and was accepted to have been made in error. However, I note that the defendant is now a top 100 ASX-listed company, such that it could not have been very far off being a top 100 ASX-listed company at the time of termination. I am not sure whether the difference between being a finance director of a top 100 and a top 200 ASX-listed company should be viewed as critical to the determination of reasonable notice. 2. Further, consistent with its submissions, the defendant identifies the plaintiff as being "a CFO and director" as at the date of termination of her employment. In fact, she was a Finance Director of the defendant. 3. I am not emphasising her title as being of particular significance but when offering the plaintiff the position in 2014, Mr Hawker said that they wanted her to become the Finance Director, which he described as being an executive director position. His words may be somewhat inconsistent with the defendant's approach to the plaintiff's position in this case, which was to suggest that she merely remained the CFO with the separate add-on of appointment as the director, as if there was really no material change to her position. 4. I regard the following matters as relevant to the consideration of the period of reasonable notice: 1. The plaintiff was 49 years old at the time of termination. 2. She had worked for the defendant since 2006. 3. She had been appointed Finance Director in 2014. 4. She was an executive director of a very large public company. 5. On the basis that the only other executive director was the CEO, she was the second most senior employee in that very large company. 6. She was a Board member. 7. Her position was so senior that she reported directly to the Board rather than the CEO. 8. She was the only woman on the Board at the time of her termination. 9. Despite being terminated without notice or warning, there is no evidence of any misconduct or improper behaviour on her part which might have justified the manner of termination. 10. Indeed, in circumstances in which I have preferred the plaintiff's evidence as to what she was told at the time of termination, she was left very much in the position of being unable to explain her abrupt termination to any future employers. 11. The comparable position is thus the position of being a finance director and executive director of a large public company. 12. In my view, it is a matter of common knowledge that there are considerably fewer women in such positions than men. It is only necessary to look at the composition of the Board of the defendant to receive confirmation of such ongoing imbalance. Statistical evidence relied on tends to suggest numbers increasing up to 30%. 13. She would be unlikely to receive a reference from the defendant. 14. Her fixed salary was high and taking account of entitlements under the Incentive Schemes, her remuneration was very high. 15. On the defendant's own evidence (comparisons of her remuneration package with the medium package) her package was well above average. 1. All of these matters tend to indicate that the period of notice suggested by the defendant of 3 to 6 months is inadequate. 2. I reject the submission of the defendant that reference should be made to the agreed period of notice for the CEO or any other employee. I do not consider that the period the CEO agreed to, presumably having regard to all the other conditions of his employment, is a factor to be considered when assessing what reasonable notice would be. [23] The subjective views of the defendant or the CEO as to what an appropriate period of notice might be for the CEO do not bear on what a reasonable period of notice might be for the plaintiff. 3. There are factors which I have identified which are not found in any other cases. Ma v Expeditors International Pty Ltd [24] may be considered a somewhat similar case. A period of ten months' notice was considered reasonable in that matter. 4. Each case is different, as is highlighted in the analysis of decisions in respect of reasonable notice periods undertaken by Mark Irving QC in his 2015 article in the Australian Journal of Labour Law. [25] 5. The plaintiff places emphasis on Shea v TRUenergy Services Pty Ltd (No 6) [26] in submitting that a very lengthy period of notice should be allowed. 6. The defendant says that the circumstances of that case are completely different and, in any event, the observations of Dodd-Streeton J were obiter and made in the context of assessing a statutory claim to compensation for alleged contraventions of the Fair Work Act 2009 (Cth) and were not made in the context of assessing whether two years would be a reasonable period of notice. 7. There is merit in the distinction made by the defendant. The Court did not find that two years was a reasonable notice period. The finding was only that it would take two years for the applicant to find a suitable job. [27] That is only one of the factors to consider, although the length of time that it may take an employee to find a job is certainly relevant. 8. There is evidence from the plaintiff about her difficulties obtaining alternative employment. Although the period of notice is to be assessed as at the date on which notice should have been given, evidence as to the difficulties in obtaining employment may be taken account of as evidence of just that i.e. the difficulties that a person in the position of the plaintiff might have in obtaining alternative employment. 9. Having regard to all the factors I have identified, 12 months is a reasonable period of notice. I would infer for the purposes of damages that, if the defendant had complied with its contractual obligations, it would have given the plaintiff 12 months' notice, equating to $690,000 in FAR. 10. The plaintiff has received a payment of an amount equivalent to three months. The balance would amount to $517,500. The STI claim The parties' positions 1. The plaintiff pleads that it was a term of her new employment contract or, in the alternative, her original employment contract that her total remuneration would include all of the cash component, a short-term incentive component and a long-term incentive component. She specifically pleads that her total remuneration for the year commencing 1 January 2018 and ending 31 December 2018 would be in the amount of $1,242,000 consisting of: 1. Fixed Annual Remuneration ("FAR") component — $690,000; 2. STI component of 40% of FAR — $276,000; and 3. LTI component of 40% of FAR — $276,000. 1. She relies on the letter from the defendant to her dated 19 December 2016, the 2017 Annual Report and the draft new agreement. She pleads that there were implied terms in the new employment contract or, in the alternative, the original employment contract that: 1. the defendant would act fairly and in good faith towards her; 2. the defendant would exercise any discretion conferred upon it honestly and conformably with the purposes of the contract; 3. the defendant would not exercise any discretion capriciously, arbitrary or unreasonably; 4. the defendant would not withhold payment of incentives to the plaintiff capriciously, arbitrarily or unreasonably; 5. the defendant would perform obligations and exercise rights under the contract reasonably and for the purposes of achieving the objects of the contract; and 6. in calculating the plaintiff's STI payment in the event that the employment contract came to an end before the end of the financial year, the plaintiff would be paid a pro rata proportion of the STI calculated upon the actual date that the employment contract came to an end. 1. The plaintiff further pleads in respect of the STI that to the extent that the defendant exercised a discretion not to pay her the STI, the discretion was exercised either on a wrong factual basis or, alternatively, unreasonably, arbitrarily or capriciously. 2. She says that the relevant date for the purposes of calculating any STI entitlement was the date of expiry of the notice period, meaning either 12 July 2018 or the date on which the Court might find any reasonable period of notice would have expired. 3. The defendant denies that the plaintiff had any contractual entitlement to payment of an STI benefit in 2018 or at any other time. It points to the words "at risk" in its correspondence to the plaintiff regarding the STI scheme and LTI plan. It says the STI scheme was in the nature of a discretionary scheme and that the defendant had a broad general discretion as to whether to make any payment under the STI scheme. It says that in exercising that discretion it was entitled to have regard to the fact that the plaintiff's employment had been terminated on 12 April 2018 and that it was terminated for poor performance. The period of notice is irrelevant. Mr Sulan emphasises that the defendant was required to exercise the discretion having regard to the interests of the shareholders, that is, it could not be paying benefits to persons who were no longer employed. 4. I extract the defendant's submission as follows: "The award of STIs was entirely within the Board's discretion. There was no policy or other document that provided employees (or the Plaintiff specifically) with an entitlement to an STI. In the Remuneration Review communicated to the Plaintiff on 19 December 2016, it specifically stated that "STI will be payable in cash, dependent on your performance as measured against some Key Performance Indicators (KPI's) … Payment of this STI will be following the announcement of the audited results of the company and will be payable if you have met the KPI's that were agreed with the Remuneration Committee." This made it clear that the award of STIs was discretionary, and depended on historical results of the company and the employee's performance. This no doubt is why, unlike the LTI payments, the Plaintiff does not allege that any rules concerning the payment of STIs was incorporated into her contract of employment." Consideration 1. On 8 December 2015, the defendant's Remuneration Committee met. As part of its remuneration review, it determined to introduce both a STI plan and a LTI plan in respect of certain senior executives. 2. On 10 December 2015, the defendant wrote to the plaintiff including the following: "In undertaking this review the Committee has introduced a Short Term Incentive Plan (STI) and a Long Term Incentive Plan (LTI) in respect of certain senior executives and subject to your agreement, you will participate in these plans. The STI will be payable in cash, dependent upon your performance as measured against some Key Performance Indices (KPI's) that will be developed in conjunction with the Managing Director in January 2016. These KPI's will be signed off by the Remuneration Committee at [its] meeting on 22 January 2016. You will be entitled to a pro-rata entitlement from 1 January 2016 to 31 July 2016 when a new plan will become applicable (possibly adopting different KPI's). Payment of this STI will be following the announcement of the audited results of the company and will be payable if you have met the KPI's that were agreed with the Remuneration Committee." 1. In its letter of 10 December 2015, the defendant set out the plaintiff's remuneration as follows: "Having regard to the above, it has been agreed that your remuneration from 1 January 2016 will be as follows:- Fixed Annual Remuneration (FAR) $675,000 At Risk STI at 40% of FAR LTI at 40% of FAR" 1. As set out in the letter, the parties had agreed that the STI benefits formed part of the remuneration payable to the plaintiff. The amount payable if any depended on satisfaction of the criteria. This does not mean that the defendant had a general discretion not to assess or not to pay if the criteria were satisfied. It agreed with the plaintiff that it would pay an STI benefit to her, calculated in accordance with the agreed formula. 2. The minutes of the Remuneration Committee meeting of 8 December 2015 are not in evidence. Nor are the minutes of the Remuneration Committee meeting of 22 January 2016, which is referred to in the memorandum from Mr Barlow to Mr Willis dated 10 March 2016. 3. It seems clear that the Remuneration Committee must have met and discussed the objectives of the STI and the performance requirements that the participants would need to satisfy in order to receive a payment. 4. On 11 April 2016, the defendant set out in memo form (and, I infer, provided to the eligible participants) the methodology for awarding the STI for FY2016 which included the following: "The Remuneration Committee has decided the methodology for awarding the short term incentive (STI) for FY16. The STI award will be pro-rated from 1 January for the FY16 year." 1. As set out in its memo, there were two relevant financial metrics being: 1. the net asset value of the defendant; and 2. cash flow to the parent company. 1. The annual pool was thus calculated with reference to the increase (or otherwise) to the defendant's cash flow and net asset value per share of the company, with a 50% weighting to each. 2. It would be difficult to describe this aspect of the scheme as discretionary. The defendant was required to consider its own financial accounts measured against the previous year. As is evident from the 2016 and 2017 considerations, there had either been an improvement or there had not been. 3. The second part to the assessment of whether an STI benefit would be paid to an employee involved a consideration of the employee's individual performance matched against five key performance indicators. This part of the process involved an element of discretion because it required both the employee and the defendant to grade the employee in each of the categories. However, there was no discretion not to grade the performance against the KPIs. The defendant had agreed to pay an STI benefit if the performance requirements were satisfied. The agreement was not that the defendant might consider whether it might pay an STI benefit. 4. There was reference in the memo to the methodology for assessing the individual's performance as follows: "The individual performance metrics will determine each participant's share of the pool. If after assessment, the sum of all individual STI awards exceeds the pool then each participant is scaled back accordingly." 1. The assessment criteria were set out in the memo. There would be a performance appraisal at the end of each year with each participant needing to demonstrate that he or she had performed each part of their job function in a way that had: 1. helped the company achieve its key financial objectives (increase cash and net asset value); 2. increased information and efficiency (improved systems and information allowing other employees or board members to focus on tasks which will achieve the financial objections); 3. reduced the risk profile of the business; or 4. aided the marketing of the company and increased the market's understanding of, and attraction to, the company. 1. At the end of the memo, the defendant summarised the operation of the scheme as follows: "At the end of the year, each participant will receive a grade against each of those areas of responsibility based on the following criteria: Grade Criteria % of KPI A Outperformance Outstanding level of performance. Exceeded expectations 115% B Target goal Achieved objective and met expectations 100% C Threshold Minimum level of performance. Performed what had to be done 85% D Underperformance Did not perform the KPI to a satisfactory level 0% The sum of the grades against each functional area will determine that person's share of the pool." 1. At some point in 2016, the plaintiff was provided with an STI assessment form for the year ended 31 July 2016, which commenced as follows: "The Short Term Incentives (STI) for the year ended 31 July 2016 will be decided by the Remuneration Committee following the release of the 2016 Audited Results. The STI will be measured over the full year, however, the amounts awarded will be pro-rated for the period from 1 January 2016 until 31 July 2016 (being the period of operation of the STI program in 2016)." 1. The form also provided: "Each participant's share of the pool is determined by grading their personal achievements and performance against each of the agreed functional areas. Participants will be awarded a grade utilising the system below. The grade will consider how the achievements and performance of the participant assisted with the achievement of the Company's overall objectives." 1. There were five KPIs. Each was allocated a percentage weighting. The plaintiff was required to and did grade her own performance in respect of each of the five KPIs. 2. On 10 October 2016, Mr Barlow forwarded a memo to Mr Willis. Parts of the memo admitted into evidence are redacted. Mr Barlow identifies the total pool calculated on a pro-rata basis as being $580,338. This was less than the potential pool because the plaintiff's potential share of the pool was $181,125. He suggested an STI award to the plaintiff of $156,673, which was based on his grading of the plaintiff's performance against the five KPIs. 3. I set out below in table form Mr Barlow's assessment and grading of the plaintiff: Melinda Weighting Grade % Weighted % Stat reporting and market information 40% C 85% 34.0% Management reporting 20% C 85% 17.0% Support board and executive decision making 20% C 85% 17.0% Taxation compliance/planning 10% C 85% 8.5% General finance function/administration 10% B 100% 10.0% Percentage of total STI award 86.5% 1. Mr Barlow's grading resulted in the plaintiff being entitled to 86.5% of the total of her potential STI benefit having regard to the total pool. 2. Even if the plaintiff received a grade of "C" across all five KPIs, she would have been entitled to 85% of her potential STI benefit. Even if she received the lowest grade "D" in four of the five KPIs, she would only need to receive a grade of "C" against the other KPI to receive something. There would need to be a grade of "D" across all five KPIs in order for the plaintiff to have received nothing. 3. The Remuneration Committee met on 12 October 2016. Again, parts of the minutes of the meeting are redacted. I extract relevant parts of the minutes below: Short Term Incentives for the Seven Months Ended 31 July 2016: The Committee discussed the performance of the senior executives of the Company. Self-assessments of their performance by the participants, having been previously distributed, were tabled and discussed. Mr Barlow presented his recommendations with respect to each senior executive. … Target Pool Ms. M.R. Roderick 157,500 181,125 The Committee reviewed the performance of the participants against the individual targets set for them. It was RESOLVED to recommend to the Board that the following STI payments be awarded in respect of the seven months ended 31 July 2016. Award Ms. M.R. Roderick 170,082 1. By letter dated 13 October 2016, the defendant informed the plaintiff that with respect to the year ended 31 July 2016 the Remuneration Committee had awarded her an STI of $170,082 before tax and inclusive of superannuation, being 108% of her targeted STI for FY2016 pro-rated for the seven months of operation of the STI plan in that financial year. 2. The plaintiff and the company went through the same process for the year ending 31 July 2017. I set out below a table in respect of the plaintiff's performance against her KPIs for the year ended 31 July 2017, comparing Mr Barlow's grading and the plaintiff's self-assessment: KPI Plaintiff's Self-Assessment Mr Barlow's Grade Stat reporting and market information A B Management reporting A C Support board and executive decision making A C Taxation compliance / planning A C General finance function / administration A A 1. A comparison of the plaintiff's self-assessment forms for the 2016 and 2017 financial years suggests that the plaintiff considered that her performance had improved in management reporting and taxation compliance/planning. Mr Barlow considered that the plaintiff's performance had improved in statutory reporting and market information and general finance function/administration. 2. It is a curious feature of this case that, according to Mr Negus, the plaintiff's alleged poor performance related to the very area in which she received the highest grade of "A" from the CEO. 3. The plaintiff received an STI payment for the year ending 31 July 2017 of $138,195. 4. On 12 September 2018, the Remuneration Committee met having received Mr Barlow's remuneration overview for that year, dated 31 August 2018. Mr Negus says he read that overview prior to attending the meeting. He chaired the Remuneration Committee meeting. He said that a decision was taken not to award any STI payment to the plaintiff. 5. The minutes of that meeting are again redacted in part. The minutes record a decision to recommend to the Board that STI payments be awarded to certain employees. They do not record any consideration of the plaintiff's entitlement to STI benefits or any decision not to pay an amount to the plaintiff. 6. However, in his second affidavit, Mr Negus outlines his approach to the award of STI bonuses and says he did not consider that the plaintiff was entitled to an STI bonus (pro-rated or otherwise) in circumstances where her employment was terminated during the 2018 financial year due to poor performance. [28] He continued: "I have set out at para 7 and 14 of my First Affidavit, the issues with the plaintiff's performance as communicated to me at the time. Those were the issues that informed my decision". 1. There is no reference to any consideration or decision with respect to the plaintiff's entitlement under the STI scheme. Mr Negus did not, in his affidavits or oral evidence, refer to any part of the minutes as referring to any consideration of the plaintiff's entitlement under the STI scheme. 2. In his first affidavit, Mr Negus says: "To receive a payment under the STI plan, an individual needs to remain employed by the defendant through the end of the financial year. It would be inconsistent with this objective to pay out pro-rated STI amounts to employees who are not employed for the duration of a financial year." [29] 1. He added to that in oral evidence suggesting that the employee needed to remain employed as at the date of assessment. The basis of his belief or conclusion is not set out. Indeed that belief is inconsistent with the defendant's own documents which refer to the assessment at the end of the financial year. 2. Further he agreed that there was no document that specified that an individual must be employed at the end of the financial year to obtain any payment under the STI. He agreed that the defendant had paid a pro-rated benefit to David Grbin, the new CFO, in 2018. He said that that was different as Mr Grbin had only commenced part way through the year. As is evident from the documents to which I have already referred, the initial STI was paid on a pro-rata basis. 3. Mr Negus was taken to the remuneration report in the 2018 Annual Report. In the STI section the amount of the plaintiff's Target STI is specified as $192,822, 100% of which is noted as having been forfeited. Mr Negus seemed unable to explain how it came about that in the Remuneration Report (signed by him as the Chair) the figure representing the plaintiff's STI entitlement was calculated on a pro-rata basis. He said it must have been for accounting purposes. I confess to not understanding what he meant. He seemed reluctant to concede the obvious, being that, if not for the forfeiture, the amount recorded would have been the amount of the plaintiff's target STI assuming that she was validly terminated. 4. In my view, the entitlement to an STI benefit each year, if the performance criteria were satisfied, was a component of the plaintiff's remuneration package in the same way as the FAR component was part of her remuneration package. The obligation to pay was contractual. If on a proper assessment of her performance, matched against the KPIs in accordance with the agreed methodology, her performance was so bad (that is, all "D"s) she would receive nothing. 5. However, if the performance was such that on application of the agreed formula she would be entitled to receive an amount, the defendant did not have a discretion not to pay it. It had a contractual obligation to pay any amount assessed as payable in accordance with the formula. 6. Although the plaintiff pleads a contractual entitlement to a specific amount, [30] it is clear from the balance of the pleading that she maintains that the obligation to pay was an obligation to pay an amount properly assessed. [31] Further, if it was necessary to do so, I would accept that there would be an implied term that the defendant not withhold any payment unreasonably, arbitrarily or capriciously. 7. The alternative claim as to the exercise of any discretion only arises on a finding that, as the defendant submits, the STI scheme was entirely discretionary and the plaintiff has not suffered any loss irrespective of any notice period. 8. The fact that the determination of the amount payable necessarily involved the forming of an opinion about the plaintiff's performance (the grading process) does not detract from the proposition that the entitlement to an STI benefit was contractual. 9. Any decision as to payment is only discretionary in the sense of assessing the plaintiff's performance against the KPIs. The fact that there might be no payment in a particular year depending on the net asset value and cash flow to parent criteria does not mean that payment of the STI was at the general discretion of the defendant. No payment would merely be a reflection of the fact that a pre-condition of payment was not satisfied. 10. At the very least, the defendant promised to the plaintiff that she would receive an STI benefit if both the company performance criteria and her own performance criteria were satisfied. The defendant was thus contractually obliged to assess both performance criteria to determine whether she qualified for a benefit. 11. There are some similarities with the issues considered in Silverbrook Research Pty Ltd v Lindley [2010] NSWCA 357, except that, unlike the position in that case, there is no document that suggests that payment of the STI is entirely within the discretion of the defendant. 12. As Allsop P said in Silverbrook at [5], the defendant did not have a free choice as to whether it should perform its contractual obligation. Further to the extent that assessment of performance involved an element of discretion, that discretion was to be exercised honestly and conformably with the purposes of the contract. [32] 13. The fact that there are no written rules for the scheme does not change the nature of the bargain entered into between the parties. 14. By its letter of 10 December 2015, the defendant offered the plaintiff an opportunity to participate in the LTI and STI plans "if she agreed". She plainly did. 15. The defendant must have considered it in its interests and in the interests of its employees that the STI and LTI plans be introduced as a form of remuneration. Presumably, if the plaintiff had not agreed, there would have been a process of negotiation as to her remuneration package, bearing in mind the potential benefits being offered under the plans. 16. As I have already noted, having regard to s 211 of the Corporations Act the defendant must have been satisfied that payment of an STI represented reasonable remuneration to the plaintiff. It is not necessary or appropriate that I speculate on what might have happened if the plaintiff had not agreed and sought an alternative form of remuneration. 17. In my view, the STI was only "at risk" in the sense that the amount that she would be paid was dependent upon the amount of the pool and her grading in respect of each of the five KPIs. The assessment made by the CEO at the same time as the defendant commenced its search to replace the plaintiff (said to be because of her performance) was in the range of "C" to "A". 18. The terms and words used by the defendant in its own documentation tend to support my views. The fact that the defendant distinguished between fixed remuneration and other remuneration tends to suggest that the defendant had agreed to pay both types of remuneration, subject only to the plaintiff satisfying the performance criteria in respect of the "at risk" remuneration. 19. Mr Barlow sent a memo to Mr Negus on 31 August 2018, headed "Remuneration Overview 2018". In this detailed memo there is commentary on the FY18 achievements, the STI plan and LTI plan. There is reference to the 2015 LTI shares vesting 100% and the plaintiff to be issued vesting shares of 9,496 with a value of $198,276. 20. It is also notable that Mr Barlow included a section as follows: "4. Fixed Remuneration During the year, a new CFO was appointed, David Grbin. David's remuneration structure compared with the median amount for comparable companies and the previous CFO is as follows: David Grbin Market Median* Melinda Roderick Fixed Remuneration 450,000 551,000 690,000 STI 140,000 263,000 276,000 LTI 140,000 93,000 276,000 TOTAL 730,000 907,000 1,242,000 1. Presumably Mr Barlow was highlighting the substantial difference/savings the defendant had achieved with the change in personnel. Of course, it might also be that the plaintiff's remuneration package was reflective of the additional responsibilities she had in her role Finance Director. By terminating the plaintiff and merely appointing a new CFO reporting to Mr Barlow and not the Board, the defendant had saved itself a considerable sum. 2. In its annual remuneration report for 2018, the defendant recorded the plaintiff's target STI as reflective up to 12 April 2018. The amount of the plaintiff's notional contribution was not variable. It was specified as 40% of her income. The amount of the pool was variable in the sense that it could only be determined having regard to the financial reports relating to cash flow to parent and net asset value. In one year, the net asset value went down and thus the total pool was only 50% (because no percentage could be attributed to net asset value). In another year, performance exceeded the target in both areas and the pool thus increased. 3. As set out in the minutes of the meeting of the Remuneration Committee of 12 September 2018 for the period ending 31 July 2018: 1. regular cash to the defendant net of its regular expenses was 0.06% higher than 2017, resulting in 80% of the target cash STI being added to the pool; 2. the growth in the defendant's adjusted net asset value of 7.47% higher than the ASX200 accumulation index resulting in 150% of the target asset value STI being added to the pool; 3. the result was that the STI pool was 115% of the target; and 4. 40% of the plaintiff's FAR was $276,000. 1. Plainly, the 2018 financial year results would result in an increased STI benefit. If the plaintiff had been employed as of 31 July 2018 then she would have been assessed on the same metrics (relating to cash to parent and net asset value) as the other three persons eligible for STI payments. There can be no doubt that the financial performance requirements were met as each of the other participants received a payment under the STI scheme. Again, key documents have been redacted, but I would infer that the amount of the payments paid to the other participants was reflective of their assessment based on grading and the overall weighting, that is, above 100% or less than 100%. 2. It seems that each of the other three participants, including the CEO, were assessed as having achieved performance targets greater than 100% and thus received payments greater than the targeted STI. 3. According to Mr Barlow, the defendant's financial performance for the 2018 year was very good. He lists the FY18 achievements in his 31 August 2018 memo as follows: "FY18 Achievements Growth in market capitalisation: $1,001 million (up 23.7%) Dividends paid: $132 million (up 3.7%) Total shareholder wealth created $1.13 billion Net Asset Value (post tax) growth: 18.2% (3.7% above the Accumulation Index) Total Shareholder Return: 29.2% (13% above the Accumulation Index) EPS growth FY18: 17.4% (three year CAGR is 26.8%) Regular cash to the parent growth: 0.45% (despite 74% drop in TPG dividend) FY18 has been a very positive year for the Company. Shareholder wealth has increased $1.13 billion ($1.0b market cap increase and $132m in dividends) during FY18. Total Shareholder Return for the year was 29.2% (13.0% higher than the All Ords Accumulation Index which returned 16.2%)." 1. These results and positive assessments against KPIs for each of the remaining participants led to higher STI payments for 2018. 2. If, as the defendant submits, the defendant had a general discretion whether to make any STI payments, it is surprising that there is no reference to the defendant considering the exercise of its discretion as regards the plaintiff in the 2018 minutes of both the Remuneration Committee and the Board. It is surprising that there is no reference to any consideration by the Remuneration Committee or the Board of whether the plaintiff might have been entitled to any payment of an STI for the period that she remained employed by the defendant up to 12 April 2018. Mr Negus might have had a view that she was not entitled to any payment as her employment had been terminated prior to 31 July 2018, but there is no note to this effect in the minutes or reference to any discussion amongst the Committee to that effect. 3. I do not accept that it formed any part of the operation of the scheme or the agreement between the plaintiff and the defendant that, if the plaintiff was not working on 31 July 2018 or as at the date of the assessment, she would be entitled to no STI benefit. There is no document that supports that proposition. There is no statement made by the defendant that supports that proposition other than the statement of belief of Mr Negus as to his belief in September 2018. Nor would I imply a term to that effect. It would be inconsistent with the defendant's documentation and lead to arbitrariness in the application of the scheme. 4. As the name suggests, the scheme is a short-term incentive scheme. It was intended to reward employees in respect of their contribution to the performance of the defendant during the particular year, based on assessment against KPIs. The defendant, in its own documentation, recognised that it could be applied on a pro-rata basis (even the defendant's 2018 remuneration report). Of course, if an individual's employment was terminated in circumstances in which the performance was so poor that any grading would have resulted in no payment under the STI scheme, then that would be the result, even on a pro-rata basis. 5. I do not accept that the amount that the plaintiff might receive was fixed. However, I accept that in failing to assess the plaintiff's entitlement to an STI payment as against the performance metrics agreed, the defendant failed to comply with its contractual obligation. 6. As there was no term of the agreement that not being employed as at the date of the Board's consideration in September 2018 disentitled her to consideration, then the defendant's failure to undertake an assessment in accordance with the agreed parameters was a breach of its obligation to the plaintiff. 7. In any event, on the finding I have made as to reasonable notice, the defendant was in breach of the contract in not giving the plaintiff 12 months' notice. If it had done so, the plaintiff would have remained employed as at the end of the relevant financial year. 8. Further, I accept that, consistent with Silverbrook, to the extent that there was any discretionary exercise in determining the amount payable, the discretion must be exercised having regard to the scope and content of the contract. The obligation (implied into the contract) on the defendant was to exercise any discretion conformably with the purpose of the scheme and not to choose arbitrarily or capriciously or unreasonably to not pay money, irrespective of whether the agreed parameters had been achieved. 9. I should also say that, even if I be wrong in my finding that the original contract no longer applied and, as the defendant submits, any decision to pay an STI benefit (if considered in September 2018) was entirely discretionary, a decision not to pay any STI benefit to the plaintiff because her employment had come to an end only a matter of days before the end of the relevant financial year would be quite unreasonable and arbitrary. 10. Further, to the extent that the defendant maintains that it did consider whether the plaintiff was entitled to a STI benefit but formed the view that she was not because she had been terminated for "poor performance", the defendant failed to consider her entitlement in accordance with the agreed parameters. Alleged poor performance needed to be assessed as against the KPIs. The defendant had no discretion to assess performance in some global way, without regard to the agreed methodology for determining an entitlement to a benefit. 11. As it happens, the defendant did not undertake any assessment of the plaintiff for 2018 for the purposes of calculating any entitlement to an STI benefit. It follows that in assessing damages, the plaintiff's entitlement must be assessed on the loss of opportunity to obtain a commercial benefit basis. The plaintiff was promised an opportunity to obtain a commercial benefit but lost that opportunity because of the defendant's breach of contract. 12. I am really adopting the approach set out in Sellars v Adelaide Petroleum at 335, as follows: "On the other hand, the general standard of proof in civil actions will ordinarily govern the issue of causation and the issue whether the applicant has sustained loss or damage. Hence the applicant must prove on the balance of probabilities that he or she has sustained some loss or damage. However, in a case such as the present, the applicant shows some loss or damage was sustained by demonstrating that the contravening conduct caused the loss of a commercial opportunity which had some value (not being a negligible value), the value being ascertained by reference to the degree of probabilities or possibilities. It is no answer to that way of viewing an applicant's case to say that the commercial opportunity was valueless on the balance of probabilities because to say that is to value the commercial opportunity by reference to a standard of proof which is inapplicable." 1. In Commonwealth v Amann Aviation Pty Ltd, [33] Deane J observed that there are cases where considerations of justice or the limitations of curial method render ultimate findings, about what would have been or will be, impractical and inappropriate. In those cases damages must be assessed on another basis, that is, with reference to the probabilities of the possibilities of what would have happened or would happen, rather than on the basis of speculation that probabilities would have or will come to pass and that possibilities would not or will not. 2. I have already commented on the evidence relating to the plaintiff's performance. 3. The defendant's 2017 assessment is instructive as it was undertaken shortly before the decision to engage a recruitment consultant to find a CFO. That is, whatever it was about her performance or lack of skillset that led to the decision to terminate her employment, it must have been that the defendant at least thought it was appropriate to do so as early as October 2017 as that is when it engaged the recruitment consultant. 4. The absence of any documentation, reviews, memos, emails or anything at all relating to her performance up to April 2018 leads me to conclude that it was something that was discussed or happened in 2017 which caused the defendant to look elsewhere. I would not infer that there was a worsening of her performance in 2018. The defendant did not call Mr Barlow. It could have done so. Mr Negus' belief was not otherwise supported and, by his own admission, he was reliant on others. 5. On that evidence, I would not find that the plaintiff's performance in 2018 deteriorated to such an extent that she would have been graded at such a low level as to not have received an STI benefit (if her entitlement to such a benefit was assessed in accordance with her contract of employment). 6. The value of the 2018 STI benefit should thus be consistent with the 2017 assessment but having regard to the 2018 pool. 7. The only remaining issue in respect of the STI is whether, as the plaintiff pleads, the relevant date for the purposes of calculating the STI benefit should be the date on which her employment contract came to an end rather than the date on which she was wrongfully terminated (as even on the defendant's case, it should have given her three months' notice). 8. The plaintiff emphasises that the employment contract does not come to an end until the expiry of the notice period. The date of purported termination might have been 12 April 2018 but the employment contract only ended on the expiry of the notice period. The plaintiff thus says her entitlement to STI payments should be made with reference to the date on which the employment contract would have come to an end but for the breach by the defendant. On my findings, this would be April 2019. 9. Whether that be correct or not, it would not result in any payment for the value of the STI benefit lost the next year as the plaintiff performed no work in the 2018–19 financial year and, I infer, would have performed no work. If the defendant had complied with its contractual obligations, it would have given the plaintiff notice of its intention to terminate her employment at the end of the notice period, but I infer would not have required her to work out that notice period. 10. There would be nothing against which to match the KPIs. Payment of the STI was dependent on a level of performance by the plaintiff. Even if the defendant had complied with its contractual obligation as to notice, it had plainly decided to remove her from her positon as of April 2018. After April 2018, she would not have been performing the role in the 2018–2019 year. I must assess the loss on the basis of what would have occurred if the defendant had given the appropriate period of notice in April 2018. 11. It is difficult to see how it could have been in the contemplation of either party that benefits would be payable under a scheme in part based on an individual's performance for the year that the individual did not perform. Different considerations may apply with respect to the LTI plan but, in my view, the only loss that the plaintiff has suffered as a result of the defendant's failure to properly pay an STI benefit in accordance with the contract of employment is the benefit which should have been assessed in respect of the plaintiff's performance for the period ending 31 July 2018. The value of the loss of an opportunity to obtain an STI benefit the next year i.e. 2019, is nil. 12. I accept the defendant's submissions as to the proper calculation of the STI benefit that she would have received based on my findings. It is only necessary that I include the methodology set out by the defendant (based on the finding that the plaintiff's performance would have been assessed in 2018 as it was in 2017) as follows: "As disclosed in the 2017 annual report, [the plaintiff] received an STI for 2017 of $138,195 which was 91.04% of her total contribution to the STI pool of $151,800. This latter figure is calculated by multiplying her notional STI contribution of $276,000 ($690,000 x 40%) by the 55% of the target awarded based on [the defendant's] performance against the relevant financial metrics. If this percentage (91.04%) is applied to her adjusted target pool for 2018 of $317,000 ($690,000 x 40% x 115%) then her hypothetical STI award for the entire 2018 financial year based on consistent performance from the previous year was $288,960.96" 1. Accordingly, the plaintiff is entitled a sum of $288,960.96 in respect of her STI claim. Interest should be calculated from 12 September 2018. The LTI Plans 1. The plaintiff was awarded LTI performance rights in each of 2015, 2016 and 2017 as follows: 1. 18,992 performance rights, pursuant to an invitation dated 10 December 2015 to participate in the company's LTI plan ("the 2015 LTI Award"). The 2015 LTI Award was governed by the terms of the invitation, the vesting conditions in Schedule 1 to the invitation and the rules of the LTI plan attached to the invitation (together, "the 2015 LTI Plan"). 2. 15,875 performance rights, pursuant to an invitation dated 19 December 2016 to participate in the company's LTI plan ("the 2016 LTI Award"). The 2016 LTI Award was governed by the terms of the invitation, the vesting conditions in Schedule 1 to the invitation and the rules of the LTI plan that had been provided to the plaintiff at the time of the 2015 LTI Award (together, "the 2016 LTI Plan"). 3. 38,284 performance rights, pursuant to an invitation dated 8 December 2017 to apply for performance rights under the company's rights plan — FY18 LTI ("the 2017 LTI Award"). The 2017 LTI Award was governed by the schedule to the invitation and the rules of the plan attached to the invitation, which were different to the rules applicable to the earlier two awards (together, "the 2017 LTI Plan"). 1. Each of the 2015 and 2016 LTI Awards was subject to a service condition, requiring the plaintiff to be continuously employed up until particular dates or events (such as the announcement of the company's annual results in a given financial year) in order for tranches of the performance rights to progressively vest. There was no service condition applicable to the 2017 LTI Award. 2. The 2017 LTI Award had not vested as at the time of the hearing and the plaintiff sought a declaration relating to those rights. The 2015 and 2016 LTI Awards 1. On 8 December 2015, the defendant executed a performance rights certificate in respect of 18,992 LTI Plan performance rights, to be held by the plaintiff upon her completion of an application form. The Invitation to participate in the company's LTI Plan letter to the plaintiff, dated 10 December 2015, included the following: "In recognition of the importance of your contribution to the ongoing success of the WHSP group (Group), the board of directors of the Company is pleased to invite you to participate in the Group's Long Term Incentive Plan (Plan). Under the Plan you may be granted performance rights (Performance Rights). Each Performance Right represents a right to be allocated or transferred one ordinary share (Share) in WHSP, subject to satisfaction of the relevant vesting conditions. Enclosed with this letter are the terms of your invitation to participate in the Plan (Invitation) and the rules of the Plan (Rules) (together, the Documentation)." 1. The plaintiff was invited to apply for the grant of 18,992 performance rights. The quantum of the grant was determined as being "40% of your FAR/VWAP". 2. In the terms of the invitation, FAR was defined to mean the plaintiff's fixed annual remuneration as at 1 August 2015 and VWAP was defined to mean the volume weighted average share price over 30 trading days prior to 1 August 2015, being $13.69. 3. The terms contained a vesting section as follows: "The Performance Rights set out above will be subject to the Vesting Conditions set out in Schedule 1 to this Invitation. If the Vesting Conditions are satisfied or otherwise waived by the Board, a Vesting Notice will be sent to you by the Company, informing you that the relevant Performance Rights have vested. Unless and until the Vesting Notice is issued by WHSP, the Performance Rights will not be considered to have vested." 1. The terms also contained a section in respect of Forfeiture of Performance Rights as follows: "Clause 10 of the Rules sets out when you may forfeit your Performance Rights. A summary of when you may be required to forfeit your Performance Rights is set out below. If you become a Good Leaver (as defined in clause 1.1 of the Rules), the Board will: (a) allow you to retain your vested Performance Rights; and (b) may, in its absolute discretion, allow you to retain your unvested Performance Rights. If the Board does not allow you to retain your unvested Performance Rights, they will be forfeited." 1. Schedule 1 to the invitation sets out the Vesting Conditions commencing as follows: "Under the Long Term Incentive Plan, the performance rights that the Company proposes to grant to Mr Barlow and Ms Roderick will only vest subject to the satisfaction (or waiver in certain circumstances) of the relevant Performance Condition and Service Condition set out below." 1. The service condition required that the plaintiff be continuously employed by the defendant (and not have resigned or been terminated) at all times between 1 August 2015 and the relevant vesting date, in order for the specified percentage of the 2015 LTI Award to vest, as follows: "● for 50% of the Performance Rights issued to you, immediately following the announcement of the Company's FY2018 annual results or, if the Performance Rights are subject to retesting, immediately following the announcement of the Company's FY2019 annual results; ● for 30% of the Performance Rights issued to you, 1 August 2019 or, if the Performance Rights are subject to retesting, immediately following the announcement of the Company's FY2019 annual results; and ● for 20% of the Performance Rights issued to you, 1 August 2020." 1. There are also performance conditions that must be satisfied. It is the performance of the company that is relevant, rather than that of the individual (only two persons were granted performance rights in 2015, being Mr Barlow and the plaintiff). Mr Barlow received his shares when his performance rights were vested. It thus could not be an issue that the performance condition was satisfied. 2. The purpose of the 2015 and 2016 LTI Plans is set out in rule 2.1 of the rules as follows: "2.1 Purpose The purpose of the Plan is to: (a) assist in the reward, retention and motivation of Eligible Participants; and (b) align the interests of Eligible Participants with shareholders of the Company." 1. As set out in rule 2.3 the company and each participant are bound by the rules. 2. As set out in rule 3.7, by submitting a duly signed and completed application form, each eligible participant is deemed to have agreed to be bound by: 1. the terms of the invitation and the application form; 2. the ancillary documentation (if any); 3. the rules; and 4. the constitution of the Company. 1. Rule 10 deals with the forfeiture of awards of performance rights. 2. The plaintiff left the company as a "Good Leaver". As the plaintiff was a good leaver, clause 10.1 applies. On the defendant's case, the plaintiff ceased to be an eligible participant when her employment was terminated. As such, she became a good leaver when her employment was terminated. Contrary to its obligation, the defendant did not, within 20 business days of the plaintiff becoming a good leaver, issue a retention notice to the plaintiff confirming to her which of her awards may be retained. Instead it waited until its annual meeting to consider whether it should exercise the discretion available under the rules to waive satisfaction of the vesting condition. 3. It might be thought that the purpose of the company issuing a retention notice within 20 days of a LTI plan participant becoming a good leaver is that the company will consider whether to waive the vesting requirement at the time of the employee's departure rather than 6 months later, when other factors might influence the exercise of the discretion. 4. Rules 10.3 and 10.7 are as follows: "10.3 Failure to satisfy Vesting Conditions Unless otherwise stated in the Invitation or determined by the Board in its absolute discretion, an Award which has not yet vested will be forfeited immediately on the date that the Board determines (acting reasonably and in good faith) that any applicable Vesting Conditions have not been met or cannot be met by the relevant date. … 10.7 Discretion (a) Notwithstanding clauses 10.1 to 10.6 (inclusive), the Board may decide (on any conditions which it thinks fit) that some or all of the Participant's Awards will not be forfeited at that time. (b) The Board may elect to disapply any of clauses 10.1 to 10.6 (inclusive), or add any further forfeiture terms, to a particular grant of Awards provided that such election is expressly set out in the Invitation relating to that grant." 1. Rule 16 deals with the administration of the plan. Rules 16.2 and 16.5 are relevant and provide: "16.2 Board powers and discretions Any power or discretion which is conferred on the Board by these Rules may be exercised in its sole and absolute discretion. The Board does not, in exercising any power or discretion under these Rules, owe any fiduciary or other obligations to any Eligible Participant or Participant. … 16.5 Decisions final Without limiting clause 16.2, every exercise of a discretion by the Board (or its delegates) and any decision by the Board (or its delegates) regarding the interpretation, effect or application of these Rules and all calculations and determination made by the Board under these Rules are final, conclusive and binding in the absence of manifest error." 1. Finally, rule 20 deals with miscellaneous matters including setting out the rights of participants in rule 20.1, which is relevantly as follows: "20.1 Rights of Participants Nothing in these Rules: … (d) forms part of any contract of service between an Eligible Participant and any member of the Group; (e) confers any legal or equitable right on an Eligible Participant whatsoever to take action against any member of the Group in respect of their Engagement Arrangement". 1. It is clear that, if the service condition was not satisfied, the Board had a discretion to waive the condition and award the rights nonetheless. 2. In my view, having regard to rule 20.1, it is also clear that, as submitted by the defendant, the 2015 and 2016 LTI Plan rules did not form part of the employment contract. 3. However, that does not mean that the plaintiff's entitlement to the performance rights was not contractual and that the defendant had a general discretion to determine whether it would issue a vesting notice irrespective of the rules. It did not. 4. In the memo dated 31 August 2018 from Mr Barlow to Mr Negus entitled "Remuneration Overview 2018", Mr Barlow noted that FY18 had been a very positive year for the company and that shareholder wealth had increased $1.13 billion during FY18. 5. The total shareholder return for the year was 29.2% (13.0% higher than the All Ords accumulation index, which returned 16.2%). The expected profit for the year was up 17.4% on the previous year. 6. Mr Negus also noted that following release of the company's FY18 results, 50% of the 2015 LTI Award would be eligible to vest. The remaining would vest 30% in 2019 and 20% in 2020. 7. He stated: "Consequently, the 2015 LTI shares will vest 100% and the shares to be issued in 2018 with respect to the 2015 LTI Plan are as follows: Executive Vesting shares Value (at 30 day VWAP) Todd Barlow 15,523 $324,110 Melinda Roderick 9,496 $198,276 Ian Bloodworth 2,484 $51,85 Dan Concannon 893 $18,635 $592,877 1. On 12 September 2018, there was a meeting of the Remuneration Committee of the company chaired by Mr Negus. Mr Barlow was in attendance as the Managing Director. In the minutes of the meeting, the Committee noted the forthcoming first test for vesting of the 2015 LTI Award, following the release of the company's results for the year ended 31 July 2018, and resolved to recommend to the Board that the equivalent shares be transferred to the participants upon vesting of the performance rights. It also considered the LTI rights to be granted in respect of the year ended 31 July 2019. There is a section "Other Business" as follows: "Other Business: Melinda Roderick LTI rights It was noted that Ms. Roderick had been granted a total of 34,867 LTI rights in respect of the years ended 31 July 2016 and 2017 which were unvested. It was RESOLVED to recommend to the Board that the rights be forfeited and that the letter be sent to Ms. Roderick." 1. That is, despite the memo of 31 August 2018, the recommendation was that all the rights held by the plaintiff under the 2015 and 2016 LTI Award be forfeited. The Board adopted the recommendations of the Remuneration Committee which had met earlier that day. 2. On 12 September 2018, the defendant wrote to the plaintiff including the following: "We hereby advise that the Board has determined for the purposes of clause 10.1 and 10.3 of the LTIP Rules that you will not be permitted to retain any of the Unvested Performance Rights. Accordingly, the Unvested Performance Rights will, on the date of this notice, automatically lapse under clause 11 of the LTIP Rules." 1. The Board's determination as to forfeiture was on the basis that all of the plaintiff's performance rights remained unvested as she had not been continuously employed up to the date of the vesting. As she was a good leaver, it could exercise a discretion to waive the vesting conditions under rule 10. Although the defendant did not comply with rule 10 and consider whether to issue a retention notice within 20 days of her becoming a good leaver, it determined in September 2018 that it would not waive the vesting condition. 2. The plaintiff says that it should have exercised the discretion in her favour, in the sense that its decision should be viewed as arbitrary, unreasonable or capricious. The defendant says that there is no basis for challenging the decision, even if it should have given reasonable notice of greater than three months. 3. There was no discretion in the 2015 and 2016 LTI Plans not to allocate or transfer shares to the participant (or pay a cash equivalent) upon the vesting of performance rights in accordance with the rules. Indeed, in the acknowledgment signed by the plaintiff in accepting the invitation to participate, there is a statement that the performance rights are deemed to have been automatically exercised on vesting and the participant will be transferred the number of shares. 4. It follows that the arguments advanced by the parties as to the exercise of the discretion would only be relevant to the plaintiff's claim to unvested performance rights. A vesting notice issues on satisfaction of the vesting conditions. The rules require that it be issued. There is no discretion not to issue the vesting notice. If the performance rights had vested then the plaintiff would have been entitled to the shares or payment of cash equivalent automatically. 5. The plaintiff submits that 50% of her 18,992 performance rights in the 2015 LTI Award were to vest in September 2018. Assuming that the period of notice was 12 months, then the plaintiff would have remained continuously employed at the time of the vesting and would have been entitled to that benefit. The contract would have ended at the end of the notice period. 6. The plaintiff's principal claim is that as result of the breach by the defendant in purporting to terminate her employment contract without notice, she has suffered loss. She identifies the loss as the loss of her salary and the benefits she would have received under the STI scheme and LTI plans. The rights vesting in 2018 1. As I have made a finding that the period of reasonable notice was 12 months, then if the defendant had given notice of termination in April 2018, the plaintiff would have remained continuously employed as at the first vesting date of the 2015 LTI Award in October 2018 but not on any subsequent vesting dates. As such, the plaintiff would have satisfied all of the conditions for 50% of the performance rights issued to her under the 2015 LTI Plan to vest. The Board would have sent her a vesting notice, which would be deemed to be automatically exercised, and she would be transferred or allocated the requisite shares in fulfilment of the vested performance rights. 2. Based on the memo of 31 August 2018, the plaintiff's 9,496 vesting shares (equivalent to 50% of her vesting performance rights) had a value of $198,276. She suffered that loss as at 12 September 2018. If the defendant had not acted in breach of its contract, then 50% of the performance rights in the 2015 LTI Award would have vested and the Board would have issued a vesting notice and transferred or allocated that amount of shares or paid their cash equivalent to the plaintiff, as it was required to do. 3. In assessing her loss flowing from the failure of the defendant to comply with the contract on a loss of commercial benefit basis, the loss is the full value of the shares the plaintiff would have received in 2018. The defendant would not have had a discretion to not issue the vesting notice and as such there is no discount for any contingency or risk that the plaintiff would not have received the benefit. The rights vesting in 2019 and 2020 1. However, she would not have satisfied the service condition in either of the 2015 or 2016 LTI Plans in respect of any of the later vesting dates. If the defendant had given the proper notice, the plaintiff could only have received any additional benefit from her LTI performance rights if the defendant had exercised its discretion to waive the applicable vesting conditions. 2. The remaining unvested performance rights in the 2015 LTI Award did not vest until August 2019 at the earliest. None of the performance rights in the 2016 LTI Award vested until 2019. She could only have obtained a further benefit if, because she was a good leaver, the defendant exercised the discretion available to it to waive performance of the service condition. 3. The plaintiff submits that the discretion available to the defendant must be exercised reasonably and not arbitrarily or capriciously. She submits that the discretion must be exercised in accordance with the purpose of the scheme. 4. The defendant submits that the discretion is an absolute discretion unfettered by such notions. There is a dispute as to the proper construction of rule 10.3 as to whether the absolute discretion referred to therein is subject to the notions of reasonableness and good faith referred to later in the sub-rule. 5. This brings to mind what was said by Allsop P in Silverbrook at [5]–[6]: "[5] The task then is to value that loss of opportunity or chance. This process begins with a proper understanding of the contractual content of the obligations and entitlements arising out of cl 4 and in particular cll 4.2 and 4.3. That the decision as to whether the respondent should receive the bonus was "entirely within the discretion of" the appellant should not be construed so as to permit the appellant to withhold the bonus capriciously or arbitrarily or unreasonably; it should not be construed so as to give the appellant a free choice as to whether to perform or not a contractual obligation. The relevant discretion should be understood against the proper scope and content of the contract. This was a bargained for bonus to be assessed against set objectives. Such a clause should receive a reasonable construction and not permit the appellant to choose arbitrarily or capriciously or unreasonably that it need not pay money the set objectives having been satisfied. [6] The discretion is to be exercised honestly and conformably with the purposes of the contract. There may be many circumstances in which it would be legitimate, and conformable with the purposes of the contract, not to pay the bonus. There may be financial stringency or misbehaviour by the respondent or some other consideration. It is unnecessary to explore the possibilities in detail. What, however, would not be permitted is an unreasoned, unreasonable, arbitrary refusal to pay anything, come what may. This would be a denial of the very clause that had been agreed. If these parties wished to make payment under the clause entirely gratuitous and voluntary such that payment could be withheld capriciously, notwithstanding the compliance with solemnly set objectives they needed to say so clearly." (Citations omitted.) 1. There is certainly merit in the proposition that the very purpose of the good leaver provisions is to enable a person such as the plaintiff to still obtain the benefit of participation in the LTI plans, even if her employment contract ends before the vesting date. Indeed, in my view, the very purpose of the good leaver provisions in the LTI plan rules is to require the Board to exercise its discretion, should the need for the discretion arise, in respect of a good leaver, within 20 business days of the participant becoming a good leaver. The defendant did not comply with this obligation. 2. Indeed, if, contrary to my finding, the original contract applied, the plaintiff would not have satisfied the service condition as at the first vesting date of the 2015 LTI Plan. In order to recover any sum for the loss of an opportunity to obtain an LTI benefit, the plaintiff would need to challenge the defendant's exercise of its discretion not to waive the service condition (the plaintiff's alternative claim). In my view, it would have been quite unreasonable, arbitrary or capricious for the defendant to have declined to exercise the discretion available to it in respect of the rights which vested in 2018, having terminated her employment in the circumstances set out (she left as a good leaver) and at the particular time, so close to the date on which the service condition would have been satisfied. 3. However, returning to the rights which vested in 2019 and 2020, as the plaintiff would not have satisfied the service condition, she could only have been granted the rights which vested in 2019 and later if the defendant had determined, in the exercise of its discretion, to waive the service condition. 4. In assessing the chance of obtaining a benefit for the purposes of assessing the loss flowing from the defendant's breach in failing to give reasonable notice, I would assess the prospects on the basis that the defendant would not have acted arbitrarily or capriciously. 5. I accept that it had a general discretion whether to waive the service condition in accordance with rule 10 but it was required to exercise that discretion conformably with the purpose of the 2015 and 2016 LTI Plans. 6. However, it does not seem to me that there would be anything unreasonable or capricious or inconsistent with the purpose of the plans for the defendant, having given reasonable notice to the effect that the employment contract ended in April 2019, declining to exercise its discretion to waive the service condition with respect to rights vesting later in 2019 and beyond. 7. For example, if a good leaver failed to satisfy the service condition by a short period, such as might have been the position if the defendant had only been required to give three months' notice, then the decision not to exercise the discretion in September 2018 might be viewed as unreasonable or arbitrary. 8. However, I do not accept that, if the defendant had given the plaintiff 12 months' notice, there would have been anything unreasonable about a decision not to waive the service condition for the rights which vested in 2019 and 2020. It follows that in assessing the chance of obtaining a benefit from the rights which vested in 2019 and 2020, the chance was negligible. 9. It follows that I would reject the plaintiff's alternative claim in respect of the performance rights in the 2015 and 2016 LTI Awards that were due to vest in 2019 and 2020 — that, irrespective of whether she would have satisfied the service condition, there were implied terms in the contract which required the defendant to exercise a discretion to waive the service condition for the vesting of rights in 2019 and 2020. It does not seem to me that there would be anything unreasonable or arbitrary or contrary to the purpose of the LTI plans in a Board declining to exercise a discretion in favour of an employee who had been given 12 months' notice and whose contract had come to an end at least several months prior to the potential vesting of rights. 10. Accordingly, the plaintiff has not established any further loss arising under the 2015 and 2016 LTI Awards. The 2017 LTI Award 1. By letter dated 8 December 2017, the plaintiff was invited to apply for a number of performance rights under a new LTI plan. As set out in the letter of invitation, each right is an entitlement, upon vesting and exercise, to the value of a share which may be settled in the form of a share or in cash. 2. The measurement period for the performance rights was 1 August 2017 to 31 July 2020. 3. Continued service during the measurement period is not a requirement in order for rights to vest. 4. However, the schedule to the letter of invitation as well as the attached explanatory booklet contain an abridged reference to rules 26.1 and 26.2 of the 2017 LTI Plan rules concerning what happens on termination of employment, as follows: "Unvested performance rights held at the date of termination and granted in the financial year of the termination will be forfeited in the proportion that the remainder of the financial year following the termination bears to the full financial year, unless otherwise determined by the Board. All other unvested performance rights will be retained for possible vesting based on performance during the Measurement Period." 1. All the performance rights were awarded to the plaintiff in the financial year ending 30 June 2018. That is the same year in which the defendant purported to terminate the plaintiff's employment. If the "date of termination" within the meaning of that term was 12 April 2018 then approximately 30% of the unvested performance rights would be forfeited (as approximately 30% of the financial year remained), unless otherwise determined by the Board. All other unvested performance rights would be retained for possible vesting based on the performance of the defendant during the measurement period. 2. The plaintiff seeks a declaration as to her entitlement with respect to the forfeiture of rights issued under the 2017 LTI Plan. The defendant does not submit that any rights have vested or have been forfeited. 3. The issue between the parties relates to the meaning of the rule as to what happens to unvested performance rights held at the date of termination and granted in the financial year of the determination. This depends on the meaning of "the date of termination". 4. If the date of termination was 12 April 2018, then any performance rights under the 2017 LTI Plan held as of 12 April 2018 would be forfeited in the proportion that the remainder of the financial year following the termination bore to the full financial year unless otherwise determined by the Board. 5. There has been no determination by the Board otherwise. If the date of termination is 12 April 2018, then there would need to be a calculation of the percentage of the 2017–18 financial year remaining to determine the portion of the unvested performance rights which would be forfeited. 6. The very purpose of a notice provision in an employment contract is to require each party to give notice of when the contract will come to an end. The term which is implied at law is a term requiring the employer to give reasonable notice of an intention to terminate the employment contract at a certain time. 7. In those circumstances, the date of termination cannot be the date on which the employer gives notice as, if the employer is complying with its contractual obligations, it is giving notice to the employee that at some future date the employment contract will end. 8. Ordinarily, it might be expected that an employer would ensure that there is a PILON clause in the contract, such that the employer has a contractual right to pay the plaintiff rather than merely give notice that the employment contract will come to an end at some future time. 9. There was such a clause in the draft executive contract provided by the defendant to the plaintiff in 2015. If agreed to, it would have allowed the defendant to satisfy its obligations in respect of notice by payment in lieu of all or part of the notice period (clause 15.4). 10. However, neither party suggests that there would have been a PILON clause existing at the time the defendant gave notice of termination. In those circumstances, it seems to me that if there was proper performance of the contract by the defendant, the termination date would have been 12 April 2019. 11. There thus would have been no unvested performance rights held as at that date that had been granted in that financial year. 12. In the circumstances, rule 26.1 does not apply to the plaintiff. Rule 26.2 applies, such that the performance rights do not lapse at the termination of employment and continue to be held by the plaintiff with the view to testing for vesting at the end of the measurement period (subject to the issue of repudiation discussed below). Repudiation 1. Both parties accept that there is a difference between termination of the employment relationship and termination of the employment contract. 2. The defendant submits that whilst dismissal terminates the employment relationship, the contract of employment continues until such time as the employee accepts the repudiation constituted by the dismissal. [34] 3. The defendant submits that the plaintiff's contract of employment came to an end by no later than 3 or 12 July 2018 because on 3 July 2018 the plaintiff sued the defendant in these proceedings for wrongful dismissal and redundancy. Further, the defendant submits that acceptance by the plaintiff of three months' salary on 12 July 2018 evidences that she treated the contract as being discharged. 4. The point of this submission is that according to the defendant, if the employment contract came to an end in July 2018, then there is no basis on which the plaintiff can challenge the decisions of the defendant (made in September 2018) not to pay an STI or LTI benefit. That is because the determination that the 2015 and 2016 LTI Awards had not vested was correct because the plaintiff was not continuously employed up to the time immediately following the publication of the 2018 results. 5. Further, it is said the decision not to pay an STI benefit as the plaintiff did not remain employed as at September 2018 was also correct as a matter of fact. 6. As set out in the original statement of claim, the plaintiff sought a declaration that the defendant repudiated the employment contract and such repudiation was accepted by the plaintiff. The plaintiff purported to accept the repudiation by her pleadings (para 20 of statement of claim). As part of the amendments to the statement of claim, the plaintiff abandoned para 20 as well as the relief sought in respect of repudiation. 7. However, the plaintiff cannot approbate and reprobate. A party may accept a repudiation of the contract by its pleadings and terminate the contract itself. This is what the plaintiff did by her original pleading. She cannot merely amend the statement of claim subsequently and proceed on the basis that she had not accepted the repudiation. 8. Having said that, the real question in this matter is what is the consequence of that acceptance of the defendant's repudiatory conduct. 9. The plaintiff relies on the principles set out in TCN Channel 9 Pty Ltd v Hayden Enterprises Pty Ltd, [35] in particular, asserting that the defendant cannot benefit from its own wrong. 10. In Hayden Enterprises, there was a contract between Channel 9 and the production company for the Midday show. Although Channel 9 repudiated the contract, the contract was brought to an end by the acceptance of that repudiation by Hayden Enterprises. 11. As the Court noted, although the contract was not an employment contract, it was a contract for personal services. The Court (Hope JA, Priestly and Meagher JJA agreeing) referred to the general principle that a contract is not automatically terminated by repudiation. A contract of services is not exempted from the general principle that repudiation must be accepted before there is a termination of the contract. [36] 12. However, as was observed in Hayden Enterprises at 148, it is generally impractical for the employee or even, in the reverse case, the employer to do other than accept the repudiation. That is the situation in this case. 13. A contract of employment is a contract for personal services. By purporting to terminate the plaintiff without notice, the defendant had demonstrated an unwillingness to comply with its contractual obligations (even on the defendant's own case). That was repudiatory conduct. The plaintiff had little choice but to accept that repudiation, terminate the contract and sue for damages. 14. To assert that, as the plaintiff brought the contract at an end prior to 31 July 2018, she cannot now complain about the failure of the defendant to assess and pay an STI or LTI benefit is to seek to profit from one's own breach. 15. In any event, I consider that the arguments about repudiation and damages are misconstrued, other than in respect of the 2017 LTI Plan. 16. The consequence of acceptance of the repudiation by the plaintiff is that the plaintiff has demonstrated that she was no longer willing to perform her side of the bargain, that is, turn up for work. She has thus brought the contract to an end. However, she could hardly do anything else in circumstances in which she was not allowed on the premises and was asked to leave the day she was told. 17. As the defendant has repudiated the contract, then the plaintiff is entitled to damages, representing the true value of the contractual rights which she has lost. [37] 18. In my view, her entitlement to damages is not affected by her termination of the contract. Damages must thus be assessed with reference to the loss of entitlements that the plaintiff would have received but for the defendant's breach. In respect of the loss of fixed salary, the matter is easily determinable. However, in respect of the STI and LTI benefits, the assessment is really the loss of the opportunity to obtain a benefit. Whether the contract was terminated by the plaintiff subsequent to breach by the defendant does not impact of the assessment of loss in those circumstances. 19. I must assess the value of that opportunity, assuming that the defendant had given 12 months' notice. 20. The plaintiff lost the opportunity to be assessed for a benefit, not because she terminated the contract by her pleading, but because the defendant acted in breach of the contract in April 2018. 21. However, acceptance of the repudiation and termination of the contract by the plaintiff on 3 July 2018 is relevant for the purposes of the forfeiture rule in the 2017 LTI Plan. If the plaintiff accepted the repudiation and terminated the contract on 3 July 2018 — which she did, by commencing proceedings on that date — then 3 July 2018 is the relevant date for the purposes of the forfeiture rule in the 2017 LTI Plan. Unvested performance rights held under the 2017 LTI Plan would be forfeited in the proportion that the remainder of the financial year bears to the full financial year (29 days over 365 days). 22. This is subject to the Board determining otherwise (that is, waiving the forfeiture). It is not up to the Court to determine otherwise in advance. This is a matter for the Board. Unless the Board otherwise determines, she has forfeited the proportion of the rights that the period 3 July 2018 to 31 July 2018 bears to the whole year i.e. the percentage of the rights. The remaining rights remain unvested but still held by the plaintiff. It is not clear to me whether there has been a decision by the defendant that the plaintiff has forfeited some or all of her rights in the 2017 LTI Award. 23. In my view, the only 2017 LTI Award rights which could be subject to any forfeiture would be the proportion forfeited by force of rule 26.1 of the 2017 LTI Plan rules (being 29/365 days). It is matter for the defendant whether it decides to waive this forfeiture when the time comes. Orders 1. The plaintiff is entitled to judgment calculated as follows: Reasonable notice claim (12 months' notice) 690,000 Balance (less three months' notice equivalent paid) 517,500 Interest (calculated on Balance from 12 October 2018) [38] 50,676.75 Sub-total 568,176.75 STI claim 288,960.96 Interest (calculated from 12 September 2018) 29,603.08 Sub-total 318,564.04 LTI claim 198,276 Interest (calculated from 12 September 2018) 20,312.71 Sub-total 218,588.71 Total $1,105,329.50 1. I have made findings for the purposes of the 2017 LTI Plan. It does not seem appropriate to make any declaration about the plaintiff's rights. No doubt the defendant will consider her entitlement when the time comes. If either party considers that I should be making a declaration, I grant liberty to restore the matter on three days' notice. 2. I thus make the following orders: 1. Judgment for the plaintiff for the sum of $1,105,329.50. 2. The defendant is to pay the plaintiff's costs. 3. Should either party seek a variation of that costs order, I grant liberty to apply on three days' notice. ********** Endnotes 1. Bartlett v Australia and New Zealand Banking Group Ltd (2016) 92 NSWLR 639; [2016] NSWCA 30 at [100]–[101] (Meagher JA). 2. Sellars v Adelaide Petroleum NL; Poseidon Ltd v Adelaide Petroleum NL (1994) 179 CLR 332; [1994] HCA 4 ("Sellars v Adelaide Petroleum"). 3. Roderick v Washington H Soul Pattinson & Company Limited [2020] NSWSC 1223. 4. Washington H Soul Pattinson & Company Limited v Roderick [2020] NSWSC 1225. 5. Affidavit, Melinda Rose Roderick, 23 November 2018 at par 43. 6. (1959) 101 CLR 298; [1959] HCA 8. 7. Quinn v Jack Chia (Australia) Ltd [1992] 1 VR 567. 8. (2016) 242 FCR 505; [2016] FCAFC 33 at [257]. 9. Russell v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney (2007) 69 NSWLR 198; [2007] NSWSC 104 at [150]. 10. (1998) 196 CLR 329; [1998] HCA 64 at [16], [19]. 11. New South Wales Cancer Council v Sarfaty (1992) 28 NSWLR 68 at 74. 12. Spartalis v BMD Constructions Pty Ltd [2014] SASCFC 124 at [26]. 13. Quinn v Jack Chia (Australia) Ltd [1992] 1 VR 567. 14. [1992] 1 VR 567 at 576. 15. (1957) 98 CLR 93 at 144. 16. Toll (FGCT) Pty Limited v Alphapharm Pty Limited & Ors (2004) 219 CLR 165; [2004] HCA 52 at [40] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ). 17. Affidavit, Melinda Roderick, 23 November 2018 at par 18. 18. (2011) 196 FCR 291 at [14]–[17]. 19. (2014) 120 SASR 575; [2014] SASCFC 124. 20. Spartalis at [19]. 21. Spartalis at [30]. 22. [2001] VSC 150 at [220]. 23. Quinn at 581. 24. [2014] NSWSC 859. 25. Mark Irving, 'Australian and Canadian approaches to the assessment of the length of reasonable notice' (2015) 28 Australian Journal of Labour Law 159. 26. [2014] FCA 271; 314 ALR 346. 27. Shea at [891]. 28. Affidavit, Warwick Negus, 5 May 2020 at par 8. 29. Affidavit, Warwick Negus, 28 August 2019 at par 21. 30. Further Amended Statement of Claim filed 5 May 2020 para 9E. 31. Further Amended Statement of Claim filed 5 May 2020 para 17B 32. Silverbrook at [6] (Allsop P). 33. (1991) 174 CLR 64 at 118; [1991] HCA 54. 34. Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 427 (Brennan CJ, Dawson and Toohey JJ); [1995] HCA 24; Conway-Cook v Town of Kwinana [2001] WASCA 250 at [29]. 35. (1989) 16 NSWLR 130. 36. Hayden Enterprises at 148. 37. Maredelanto Compania Naviera SA v Bergbau-Handel GmbH (The Mihalis Angelos) [1971] 1 QB 164. 38. The obligation of the defendant would only have been to pay a salary on a month-to-month basis for that 12-month period. I have simply undertaken an average and selected the six-month date for the purposes of interest. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 10 September 2020