Industrial Relations Commission of New South Wales in Court Session CITATION : Robert Gordon King v State Bank of New South Wales [2000] NSWIRComm 229 APPLICANT PARTIES : Robert Gordon King RESPONDENT State Bank of New South Wales FILE NUMBER: IRC1153 of 1996 CORAM: Marks J CATCHWORDS : Unfair contract - Reasonable notice - Failure to make reasonable payment and to apply concessional housing loan provisions caused distress - Compensation for distress. LEGISLATION CITED : Industrial Relations Act 1991 s 275 Industrial Relations Act 1996 s 106 Reich v Client Server Professionals of Aust Pty Ltd [2000] NSWIRComm 143 Vincent v Merrill Lynch (Aust) Pty Ltd [2000] NSWIRComm 160 CASES CITED : Stonham v The Speaker of the Legislative Assembly of NSW (2000) 97 IR 325 Pullen v R & C Products Pty Ltd (1994) 60 IR 183 Addis v Gramophone Co Ltd (1909) AC 488 Baltic Shipping Co v Dillon (1983) 176 CLR 344 HEARING DATES: 04/10/2000; 04/11/2000; 04/12/2000; 07/03/2000; 11/09/2000; 11/13/2000; 11/14/2000; 11/15/2000 DATE OF JUDGMENT: 12/06/2000 APPLICANT Mr J J E Fernon of counsel SOLICITORS Toomey Pegg Drevikovsky LEGAL REPRESENTATIVES: RESPONDENT Mr J V Murphy of counsel SOLICITORS Mallesons Stephen Jaques JUDGMENT: INDUSTRIAL RELATIONS OF NEW SOUTH WALES IN COURT SESSION CORAM: MARKS J Wednesday 6 December 2000 Matter no IRC 1153 of 1996 ROBERT GORDON KING v STATE BANK OF NEW SOUTH WALES Application under s 106 of the Industrial Relations Act 1996 JUDGMENT 1 In these proceedings the applicant Robert Gordon King seeks certain relief against the respondent State Bank of NSW pursuant to the provisions of s 106 of the Industrial Relations Act 1996. The proceedings were originally commenced under summons issued pursuant to s 275 of the Industrial Relations Act 1991 which was replaced by an amended summons filed in Court on 10 April 2000, being the date set for the commencement of the hearing of the matter. It was common ground that the provisions of the 1996 Act applied to these proceedings. 2 The statutory basis for the proceedings is to be found in the combined operation of s 105 and s 106 of the Industrial Relations Act 1996 ("the Act") which are in the following terms: 105 Definitions In this Part: contract means any contract or arrangement, or any related condition or collateral arrangement, but does not include an industrial instrument. unfair contract means a contract: (a) that is unfair, harsh or unconscionable, or (b) that is against the public interest, or (c) that provides a total remuneration that is less than a person performing the work would receive as an employee performing the work, or (d) that is designed to, or does, avoid the provisions of an industrial instrument. Note. The jurisdiction of the Commission under this Part is exercisable only by the Commission in Court Session. 106 Power of the Commission to declare contracts void or varied (1) The Commission may make an order declaring wholly or partly void, or varying, any contract whereby a person performs work in any industry if the Commission finds that the contract is an unfair contract. (2) The Commission may find that it was an unfair contract at the time it was entered into or that it subsequently became an unfair contract because of any conduct of the parties, any variation of the contract or any other reason. (3) A contract may be declared wholly or partly void, or varied, either from the commencement of the contract or from some other time. (4) In considering whether a contract is unfair because it is against the public interest, the matters to which the Commission is to have regard must include the effect that the contract, or a series of such contracts, has had, or may have, on any system of apprenticeship and other methods of providing a sufficient and trained labour force. (5) In making an order under this section, the Commission may make such order as to the payment of money in connection with any contract declared wholly or partly void, or varied, as the Commission considers just in the circumstances of the case. 3 In summary form, the applicant alleged that he was approached on behalf of the respondent whilst an employee of Citicorp Australia Ltd to join its Project Finance and Advisory Services Division, that he accepted an offer of employment in that Division but was shortly thereafter retrenched Upon retrenchment he ceased to become entitled to concessional interest rates on two loans which he had negotiated with the respondent as a staff member and alleged that the payment he received on retrenchment was inadequate. Furthermore, the applicant alleged that the combination of the high interest rate charged by the respondent and his financial circumstances arising from his unexpected termination of employment forced him to sell his house with consequent financial loss and he developed a clinical depression condition. The applicant claimed compensation for distress and the like in addition to other relief sought under s 106. THE FACTUAL CIRCUMSTANCES 4 The applicant was employed by the Citicorp Group between August 1986 and October 1989. He had commenced as an Executive Manager in its Corporate Banking Division and was later transferred to the Citicorp Investment Bank as an Assistant Vice President primarily involved with mergers and acquisitions, capital raisings and advisory services in the area of investment banking in Australia and New Zealand. Whilst at the Bank he enjoyed low interest housing and investment loans as well as other benefits as part of his salary package. 5 The applicant said he was approached by recruitment consultants Brauer Galt & Co Pty Ltd to ascertain his interest in securing a position with the respondent. This appears to have occurred in about July 1989. Between August and October 1989 the applicant had a number of conversations and meetings with Mr Chris West who was then General Manager of the Project Finance and Advisory Division (PFAS) of the Bank and the applicant met Mr George Gulczynski the Chief Manager of that division. During the course of these discussions he was offered appointment as a senior manager within the division at a salary package which he said was $120,000 per annum and was told that the Bank paid bonuses for performance. He was also told that he would have access to a housing loan at discounted interest rates and preferential interest rate finance for a motor vehicle and investment loans. He also met the Chief General Manager of the respondent's Corporate Banking Division Mr Alan Whitehead. 6 The applicant alleged that he was given information about the manner in which the PFAS Division functioned and that he was told that the respondent had a strategic plan to provide a full range of banking and non banking financial services of which merchant banking would form an integral part. 7 On 5 October 1989 Mr Gulczynski sought approval from Mr West to recruit the applicant at senior manager level. This was supported by Mr West and by Mr Whitehead on 19 October. It was approved by Mr John O'Neill the Managing Director of the respondent on the same day. 8 A letter of offer was forwarded by Mr Gulczynski to the applicant dated 24 October 1989 which was accepted by the applicant, who commenced employment on 13 November 1989. 9 During the course of cross-examination Mr Murphy of counsel who appeared for the respondent closely questioned the applicant concerning the circumstances in which he had left Citicorp Australia Ltd and the security of his position with that organisation at the time that he received an approach from the respondent. There was tendered into evidence a letter from the Personnel Department of Citicorp Australia Ltd to the applicant dated 29 August 1989 which referred to the applicant's position as having become redundant and referred also to a retrenchment package which was said to be effective on 30 August 1989. The applicant conceded in cross-examination that by mid-1989 the finance industry was generally in a state of turmoil and it was put to him that he was in fact retrenched from Citicorp prior to the date that the applicant had taken up employment with the respondent. 10 The applicant resisted any such suggestion by stating firstly that he was unhappy working with the Citicorp Group, not because of any insecurity of position but because predominantly of a poor relationship with a new manager of his division. He said that he was confident however that he could have obtained a transfer to another division. He also asserted that at the time that he left Citicorp he was well advanced in his negotiations with representatives of the respondent and was confident that a position would be offered to him. It was for this reason that he initiated negotiations with Citicorp which resulted in a negotiated departure from that organisation on the basis of redundancy. This had some tax effective consequences. He conceded that he received a payment of three month's redundancy pay having been employed for about three years. He further conceded that within two months of leaving that organisation he was required to re-finance his concessional loans. 11 The applicant said that prior to accepting employment with the respondent he had made inquiries about the respondent's financial state and had reviewed its annual reports. He noted that the respondent had never reported a loss. 12 In about January 1990 the applicant negotiated with the respondent to obtain two loans at concessional interest rates. He offered by way of security a home in Spofforth Street Cremorne which he estimated was valued at $860,000. He declared existing borrowings of about $300,00 from Citibank and ANZ. The applicant was granted a fixed rate loan of $147,000 for five years with interest only payments at a rate of 6% and a loan of $100,000 at the same interest rate repayable as to principal and interest over 30 years. 13 The documentation with respect to both loans contained the following provision: "If the customer is a staff member then, in the event of such staff member leaving the Bank's employment, the security becoming income producing or unoccupied by the staff member, then the Bank shall be entitled to immediately review the loan and the Terms and Conditions applying at the date of the review." These advances were made in January 1990 and discharged all of the applicant's indebtedness to Citibank and part of his indebtedness to ANZ Bank. That bank continued to hold a second mortgage over the property at Spofforth Street, subject to a first mortgage in favour of the respondent Bank. 14 Some time in June 1990 Mr West told the applicant that the respondent would be closing down the Corporate Advisory Division and the other activities of PFAS. Mr West said that he was going on long service leave on 1 July and that the applicant was to take control of all outstanding transactions within PFAS and bring them to a satisfactory conclusion. The applicant said that he was told by Mr West that he should look for another job but that everyone in the PFAS area was being redeployed around the Bank except for a Mr Corrigal. The applicant asked Mr West for a reference which was provided to him on 26 June 1990, however the applicant hoped that he would be redeployed within the respondent Bank. As it transpired no such redeployment occurred and by letter dated 14 August 1990 under the signature of Mr Whitehead the applicant was informed that the respondent had not been able to identify any other suitable position for him and that his services would cease from Friday 14 September 1990. 15 On termination of employment the applicant received a severance payment of four weeks calculated on a salary package of $113,000, four weeks pay in lieu of notice calculated on a base salary of $79,960 as well as payment for outstanding salary and recreation leave. He was also given until 14 February 1991 to arrange to repay or re-finance at customer rates his loans from the Bank by making application for new loans. 16 The next stage of the relationship between the applicant and the respondent consisted of negotiations and communications relating to the repayment of the respondent's debt. The applicant made a number of proposals and sought the assistance of the respondent in restructuring debt based on his hopes of earning income from a variety of sources which would enable him to service his ongoing loans. The respondent exercised some patience although it insisted that interest become payable at ordinary customer rates, at that time 14.5%. This rate was initially applied from the date the applicant ceased employment with the respondent but an adjustment was subsequently made by the respondent. 17 The interest rate charged by the respondent and the conduct of the respondent with respect to the loans formed a pivotal part of these proceedings and I shall refer to this issue later in these reasons for judgment. For present purposes it is sufficient to note that the respondent served a notice of default on the applicant in September 1991. 18 Eventually, the applicant's father paid off some of the applicant's indebtedness to the respondent. The property was sold and settlement of the sale was effected on 2 February 1993 when all outstanding liability to the respondent was discharged. 19 The applicant alleged that as a result of the termination of his employment and the resultant financial and emotional pressures he developed a serious clinical depression requiring treatment and that the circumstances created by the respondent and the resultant stress brought about the termination of his relationship with his then defacto wife and her daughter. 20 Following the termination of his employment with the respondent the applicant endeavoured to obtain work from a variety of sources. He initially worked as a consultant until 1993 where his income appears to have been contingent upon various transactions on which he was working coming to fruition. It appears that none of these transactions, or at least no significant transactions did come to fruition and that the applicant earned minimal income until he obtained employment with Hambros Australia Ltd in 1993. 21 An affidavit of Stephen Arthur Patrick was tendered into evidence and he was not required for cross examination. Mr Patrick is the Principal of Richardson & Wrench Mosman, Real Estate Agents and was engaged by the applicant to sell his home at Cremorne. The sale of the home was completed on 2 February 1993 for a sale price of $620,000. It was the opinion of Mr Patrick that a comparable property to that which was then owned by the applicant would, as at April 2000 sell in the range of $1.1 million to $1.2 million. 22 David Stuart Watt Chartered Accountant of the accountancy firm Horwath Services gave affidavit evidence concerning the amount of interest which the applicant had paid on the two loans from the respondent totalling $247,000 for the period from the commencement of the loans to the date of settlement of the sale of the house. The interest actually paid was $78,271. If that interest had been charged at the rate of 6% per annum throughout this period and the applicant had made all repayments required under the terms of those loans the total interest payable would have been $44,700. This leaves a mathematical difference of $33,571. However this resultant figure is not entirely accurate because the respondent Bank did make refunds of interest in February 1993, to which I have previously referred. 23 A report of Mr Watt dated 6 April 2000 annexed to his affidavit provided a number of calculations which assumed that as at that date the applicant had remained an employee of the respondent, had continued to be entitled to a concessional interest rate of 6% per annum on his loan from the respondent, had continued to meet his existing debt commitments at the same level and had maintained the property in a good state of repair without undertaking any major renovations or alterations. Mr Watt estimated the value of the property based on relevant real estate indices as at March 2000 would have been either $1.45 million or $1.26 million. Mr Watt then assumed that the applicant's indebtedness as at March 2000 would have remained in the order of $400,000. On this basis it was possible to calculate the value of his estimated equity in the property as at March 2000. In order to achieve this Mr Watt also calculated the theoretical interest that the applicant may have derived from the investment of the net proceeds of sale of the property in about February 1993 during the period 1 March 1993 to 10 April 2000. For this purpose Mr Watt calculated compound interest on an after tax basis using interest rates for ten year treasury bonds. Theoretically the interest earned amounted to $58,930. Accordingly, from the value of the theoretical net equity in the property as at March 2000 there should be deducted $190,000 to give credit to the respondent for the actual equity in the property realised by the applicant. 24 Evidence concerning the applicant's condition of depression was given by Dr Ian Harrison a Consultant Psychiatrist whose written report of 2 December 1996 and accompanying affidavit were tendered into evidence. 25 Dr Harrison was first consulted by the applicant on 28 January 1993, having been referred by a general practitioner. He gave a history of having been retrenched from the respondent after employment in a senior position. Dr Harrison recorded that the applicant said that his termination had occurred "rather suddenly and without warning in August 1990". The applicant asserted that life had been a real struggle for him since that time. 26 The applicant gave a history of having started using cocaine sporadically in his twenties. After the termination of his employment by the respondent it was thought by his family and his de facto partner that he might have a problem with substance abuse particularly cocaine and alcohol because of behavioural problems such as irritability, mood swings and anti-social behaviour. He was referred to a psychiatrist in 1991 who, it was said by the applicant, had diagnosed a severe clinical depression and prescribed treatment with anti-depressant drugs. However side effects of this medication affected his memory and his motivation and ability to work. The applicant told Dr Harrison that he separated from his de facto partner in 1991 and this separation together with loss of contact with his partner's daughter then aged five years affected the applicant severely. 27 The applicant told Dr Harrison that his use of cocaine was intended as a means of providing a stimulant and therefore countering his feelings of depression. Dr Harrison thought that the use of cocaine was a secondary manifestation of the depression itself. 28 The applicant's personal problems were exacerbated by his financial situation which culminated in the sale of his house. The applicant described symptoms in January 1993 of poor concentration, inability to concentrate on conversations, irritability in mood and inability to prioritise and organise himself. This was associated with disturbance in sleep pattern and mood swings with a diurnal pattern. The applicant had developed negative thoughts about himself and his prospects. 29 Dr Harrison thought that the applicant was suffering from a major depressive illness with endogenous symptoms. Dr Harrison dated the applicant's first episode of major depressive illness as having occurred after the termination of his employment from the respondent. 30 Subsequently the applicant was treated with a variety of anti-depressant medication with varying success. As at the date of Dr Harrison's report, 2 December 1996, the applicant continued to suffer from symptoms associated with his major depressive illness. 31 In his report Dr Harrison made the following comment: "While one cannot be certain about the actual origins of Major Depression as it is commonly multi-factorial in its causation, it would seem from the history that I have been given that Robert's depression is related to the stress associated with his retrenchment, which appears to have triggered the depression and the subsequent forced sale of his house. Furthermore, other adverse events associated with that period of time, namely the break up of his relationship and the loss of his step-daughter (name omitted) seemed to have occurred as a consequence of the depression. Subsequently the loss of Robert's house has had a negative effect in most likely perpetuating the symptoms of Major Depression." 32 Cross examination of Dr Harrison by Mr Murphy elicited the following: a) Dr Harrison was dependant upon the description of the symptoms as given to him by the applicant. b) Some of the symptoms such as irritability, difficulty in concentration, short temper, and difficulty in communicating appeared naturally in some people without being associated with depression. c) Dr Harrison was unaware that the applicant had in fact been given four week's notice of the termination of his employment. d) The use of cocaine and alcohol can cause symptoms similar to those which are seen in depression but usually these symptoms remit within two weeks of ceasing such substance abuse. The applicant told Dr Harrison that he was using cocaine fairly frequently in the early 1990's after he became depressed. Dr Harrison was not told by the applicant as to how often the applicant was using alcohol. e) The applicant's separation from his de facto partner and her child affected him severely and this could have caused symptoms upon which a diagnosis of depression could be made. f) It is possible that the use of cocaine and alcohol could have perpetuated and exacerbated the applicant's symptoms. g) When told that the applicant after he gained employment consequent upon the termination was involved in putting together complex financial proposals, Dr Harrison expressed surprise that the applicant would be able to do so without some difficulty. In addition, the failure to earn any anticipated meaningful income through this period could have caused the applicant's symptoms. h) In Dr Harrison's opinion part of the applicant's difficulties were related to his perception of the poor treatment received by him from the respondent with respect to the refinancing of his loans post termination of employment. i) The applicant's drinking to excess could have been a possible consequence of depression. This would be more so if he had otherwise appeared outwardly happy at the time. j) In terms of the initiating event, it was possible that when the applicant was told that he should look for another job upon closure of the division in which he was working it was this fact that could initiate a depressive illness. k) Adverse experiences post termination of employment could add to the applicant's already existing feeling of hopelessness and depression. l) During the period of his consultations with and treatment of the applicant there were no outward actual signs of depression as contained within his clinical notes. 33 Affidavit and oral evidence was given by Christopher West who was employed by the respondent as General Manager of its corporate finance group between June 1988 and June 1990. 34 Mr West said that he met the applicant in either September or October 1989 at a meeting attended by Messrs Whitehead and Gulczynski in connection with the prospective employment of the applicant within the corporate advisory unit of the respondent's merchant banking operations. At that meeting Mr Whitehead is alleged to have told the applicant that the Bank had a strategic plan to provide a full range of banking and non banking financial services including merchant banking. The applicant was told by Mr West that the Bank was seeking the applicant's services for the purpose of building up the merchant banking division, then called Project Finance and Advisory Division. 35 Mr West was due to take long service leave in June 1990. Mr Whitehead discussed appointing a person to take Mr West's role while he was away. 36 Mr West said that in about June 1990 he met with the applicant and told him that the Corporate Advisory Unit and other activities of PFAS were to be wound up and that the applicant was to take control of all outstanding transactions and conclude them within a period of three months, as Mr West would be on long service leave from 1 July. Mr West also told the applicant that "If I were you, I would be looking for another job, but it is intended that everyone be redeployed around the Bank ….". Mr West confirmed this situation in a letter to the applicant dated 4 June 1990. 37 Mr West was cross examined at some length as to his knowledge concerning the decision ultimately taken by the respondent to close down the Corporate Advisory Unit and the other activities of PFAS. It was Mr West's evidence that the situation of that unit and that division of the respondent's activities had been under continual review for some months before an ultimate decision to close them down was taken. The first occasion when Mr West became aware of the respondent's decision was at the end of May or early June when he was given the task of carrying out the closures. 38 Mr West also confirmed that it was his understanding that the applicant would have some form of continuing position with the respondent notwithstanding the closure of the Corporate Advisory Unit. He said, that if this had not been the case he would have retrenched the applicant as he did with other employees. 39 An affidavit of Camille Mary Svenson was tendered into evidence. She first met the applicant in about June 1989 and commenced living with him in October or November that year at his home at Cremorne. She believed that the applicant commenced employment with the respondent about one week after she commenced living with him. At that time the applicant appeared to her to be extremely happy at having secured employment with the respondent. During the period November 1989 to approximately June 1990 she observed the applicant to be happy and outgoing and he appeared to derive a great deal of satisfaction from his work with the respondent. The applicant and she entertained at home regularly during this period and enjoyed outings with her daughter who also lived with them. 40 Ms Svenson observed a change in the applicant's demeanour in about June 1990 when he became irritable, short tempered and difficult to communicate with. He was also affected by alcohol upon arriving home from work. She said that because of poor communication their relationship broke down at about the end of June 1990 although she continued to live in the same house with the applicant. 41 She recalled the applicant coming home in about September 1990 stating that he had lost his job. In the latter part of 1990 the applicant's behaviour deteriorated to the extent that he was unable to go out socially or leave the house for very long. He also failed to attend to payment of normal household expenses. The applicant's behaviour deteriorated further until June 1991 when Ms Svenson moved out of the premises. The applicant remained irritable, short tempered and uncommunicative during this period. 42 Ms Svenson continued to see the applicant from time to time. She has noticed a marked improvement in his demeanour and behaviour since he obtained full time work in February 1993. 43 Evidence was called by the respondent of Robert John Moulds who was, for the period relevant to these proceedings an account manager in the Asset Management Group of the respondent. It was part of Mr Moulds' responsibility to handle "impaired" loans in the corporate area. He was given responsibility by Mr Whitehead to review the applicant's various loans with the Bank as a result of representations which the applicant had made to the Bank concerning, in particular, the interest rate which had been charged on his two housing loans. I have earlier referred to some of the background to the applicant's loan from the respondent at concessional interest rates. (see paras 12 and 13). I have also referred to the contention which arose between the parties concerning this matter after termination of employment. (see paras 16 to 18). 44 On 10 January 1991 Mr L Dando, Manager Loans with the respondent wrote to the applicant advising him that he was in arrears with respect to his overdraft, housing overdraft, term loan and personal loan to the extent of about $10,000 and seeking an interview so that a proposal could be formulated to adjust the arrears. At an interview of 24 January 1991 the applicant asked that he be enabled to draw cheques totalling $1,615. He said that he had a five year old daughter and a wife with no money to feed them over the weekend and a total of $25 in cash. The applicant blamed his redundancy for his situation and indicated that he was working on a number of "deals" which might secure him some income. He said that he was aware of his current financial position and was quite prepared to sell his house if this became necessary. He asked the respondent to carry his accounts for three months and capitalise interest in that period as well as allowing him to draw $2,000 per month for living expenses. The applicant indicated that he had a second mortgage to the ANZ Bank of $100,000. 45 Mr Dando in a written recommendation conjointly signed with Mr P C Smith, Trainee Loans Officer, recommended that interest not be capitalised and recommended that the applicant should not be allowed to cash a cheque for $300. This was because his home contents were valued in excess of $217,000 and there were certain items which could be sold. Notwithstanding this memorandum it appears that another officer in the Bank did approve allowing the applicant to cash a cheque for $300. 46 The applicant was interviewed by Messrs Dando and Smith on 25 January 1991. A memorandum signed by them dated 31 January states that the applicant told them that his property at Cremorne was worth between $800,000 and $900,000 with a rent value of $600 per week. The applicant also told them that "he knew he was in financial difficulties but did not want to sell his house yet. He felt he could trade/consult his way out. He asked if the Bank would capitalise interest for three months." 47 After making certain inquiries and in particular inquiries concerning the second mortgage on the property to ANZ Bank Messrs Dando and Smith recommended that they conduct a further meeting with the applicant on 1 February 1991 but in the meantime that action be taken to freeze his Visacard and overdraft facility. 48 By letter dated 28 February 1991, written after further negotiations with the applicant Mr Hanson, Regional Lending Manager and Mr Meldrum, Manager of the respondent's Business Banking Centre wrote to the applicant confirming that the Bank would not provide further facilities and pointing to arrears in the applicant's overdraft, housing overdraft, term loan and personal loan which, at that stage, exceeded $14,000. They indicated that unless some evidence was provided within 14 days to the effect that the applicant would refinance or sell assets, the matter was to be referred to the "Recoveries Division" for further consideration. 49 An internal minute dated 14 March 1991 noted that the applicant's debt was increasing by $5,000 per month through accruing interest, that the applicant had not been successful in obtaining employment or any alternative source of income and that allowing for a valuation of the property of $472,000, there was minimal security for the Bank after taking into account moneys owing to the ANZ Bank. Unless some adjustment was made to the account within one month legal action would commence immediately for recovery of the debt. At the same time ANZ Bank was also considering action to realise its security on the Cremorne property. 50 The applicant's position had not improved by 30 April 1991. Negotiations continued with the applicant. He was advised that the respondent would commence legal action to recover the moneys owing. 51 The respondent continued to liaise with ANZ Bank concerning their respective priorities with respect to certain loan advances as well as the applicant. On 6 June 1991 the applicant met with Mr McLennan, Chief Manager of the respondent and told him that his "wife" had left him and he was under considerable health worries due to stress. Mr McLennan issued instructions that the Bank suspend taking action for three weeks because there was a possibility that the applicant might be able to derive some large fees with respect to a transaction involving David Jones Ltd. 52 By 12 August 1991 the applicant's arrears amounted to about $52,000. The respondent again resolved to commence proceedings. A notice of default was served on the applicant on 2 October 1991. 53 The respondent issued a summons out of the Supreme Court of New South Wales seeking an order for possession which was served on the applicant on 23 January 1992. 54 In a letter dated 31 March 1992, Keddies Solicitors acting for the applicant advised ANZ Bank that the summons which had been issued against the applicant had been withdrawn because the default notice upon which it was based was defective. The letter indicated that the Bank would reissue the default notice. 55 ANZ Bank then determined to commence its own legal action against the applicant. There then following detailed correspondence between solicitors acting for ANZ Bank and the respondent concerning the question of priority of their respective accounts and facilities. 56 In November 1992 Mr Andrew Stevenson, solicitor who was then Chairman of the International Division of Corrs Chambers Westgarth became involved on behalf of the applicant and commenced negotiations with Mr McLennan. A letter from Mr McLennan dated 18 November 1992 indicates that the current interest rate then being charged on the overdraft was 12.15%, on the housing loan 9.90%, on the term loan 14.5% and on the personal loan 13.5%. 57 The applicant's father subsequently made arrangements to pay certain moneys off the indebtedness and the Cremorne property was sold. 58 In January 1993 there was correspondence between Mr Stevenson and the respondent concerning the amount of interest that had been charged. I note that on the housing loan of $100,000 the interest rate applied by the Bank until the cessation of employment on 14 September 1990 was the concessional rate of 6%. Thereafter the applicant was charged the Bank's variable housing rate which as at 13 August 1990 was 16.25%, as at 17 September 1990 15.75% and the rate gradually reduced to 9.9% as at 17 August 1992. As at March 1991 the rate charged to the applicant was 14%. The applicant had an overdraft of $10,000 which always seemed to be at a commercial interest rate. For example as at 27 September 1989 the interest rate was 21.5%, gradually declining to 12.15% as at 17 August 1992. A penalty rate was applied to any amount which exceeded the overdraft limit of $27,000. 59 Interest on the applicant's personal loan had always been charged at 13.5%. 60 The fixed loan of $147,000 had a five year term, the concessional interest rate being 6% per annum, with interest only being payable during the term of the loan. An internal document issued through the respondent indicated that when the fixed loan of $147,000 was negotiated there were no conditions which applied. It was for a term of 12 months reviewable annually and no additional amount was payable on early repayment. 61 When the applicant's father paid moneys towards the fixed loan, the respondent had converted it to a five year term due to expire 23 January 1995 at an interest rate of 14.5%. This conversion also carried with it an "early termination interest adjustment" which, as I understand the term, allowed the Bank to make a charge on early discharge which equated with any additional cost to it of utilising the moneys payable on discharge because of an underlying reduction of interest rates. The amount which was in fact charged to the applicant when his father paid moneys to partially discharge the fixed loan by way of early termination interest adjustment was $19,225. 62 Mr Stevenson made representations to the respondent for the remission of the early termination interest adjustment. The matter was reviewed by Craig Marnock a senior interviewing officer on 1 February 1993. It was the opinion of Mr Marnock that on termination of the applicant's employment the applicant's concessional interest rate should have continued to have been applied until 17 March 1991. The loan should then have been reviewed and new facilities at customer rates should have been created. However no review was undertaken. Mr Marnock also said that the fixed term loan should have been converted to the Bank's variable housing rate with payments being converted to principal and interest. He said "however it was converted to the Bank's variable housing rate of 14.5% pa and fixed for the remaining term. This was incorrect and customer was not made aware of the fact that rate was fixed until 1995." 63 Mr Marnock recommended that the early termination interest adjustment of $19,225 should be refunded and any further adjustment be waived. He also recommended a refund of debt administration fees of $626, of debit interest of $19,495.78 incurred between 14 September 1990 and 31 January 1993 and an interest adjustment of $157.35 incurred on legal fees. It appears from documentation that all of these recommendations were implemented by the Bank. 64 By letter dated 22 January 1993 Mr Stevenson offered, on behalf of the applicant to settle his outstanding claims against the Bank concerning the circumstances of his retrenchment and the payment of all indebtedness. He said that the applicant would settle upon payment of a further six month's retrenchment allowance of $60,000, a rebate of all bank fees and charges, and a rebate of interest in excess of 6% charged on the total home loan of $247,000. 65 The applicant had a telephone conversation with Mr Moulds in March 1993. The applicant is alleged to have made some reference to Mr Moulds about the possibility of the respondent being exposed to the media as to how it had mistreated him. 66 As a result of internal discussions within the respondent between Mr Moulds and Mr Whitehead and in response to the representations made by Mr Andrew Stevenson a detailed letter was forwarded by Mr Moulds to the applicant dated 14 April 1993 covering the totality of the applicant's banking and loan arrangements up until that date. The letter summarised the various rebates of interest and the refund of certain fees to which I have earlier referred. 67 The applicant wrote to Mr Moulds by letter dated 10 August 1993 in which he reiterated his claim that he should have been charged interest on all home loan borrowings at 6% and that the respondent should continue to apply this rate. 68 Evidence was given on behalf of the respondent by Alan Whitehead who was formerly the General Manager of the Corporate and Financial Institutions Division of the respondent before his retirement. Mr West reported to Mr Whitehead. 69 It was Mr Whitehead's evidence that the respondent had expanded its business activities globally in the early part of the 1980's and had also expanded the nature of its banking business. In 1988 the respondent experienced "the early stages of corporate lending problems due mainly to the effects of the stock market crash of October 1987". He said that the problems were exacerbated by excessive lending to the property market coupled with an upward trend in interest rates. By early 1989 the financial impact on the respondent was starting to be felt within the Corporate and Financial Institutions Division. The then Managing Director Mr O'Neill had called for proposals from three consulting firms to advise the Bank on restructuring its wholesale banking group in April 1989. The PA Consulting Group was eventually retained and it provided a report dated 2 August 1989 in which recommendations were made to restructure the wholesale banking group. My reading of the outline of this report which consisted of a number of "overheads" demonstrates that the report was directed towards the restructuring of the wholesale bank group within the respondent and that there was no particular recommendation which would have then impacted upon the long term, or even short term viability of the group. 70 It was Mr Whitehead's observation that throughout 1989 and into 1990 the corporate lending market continued to deteriorate and was in turmoil. Most areas within the Corporate Finance Group which was formerly the Wholesale Banking Group were under-performing. Accordingly, the Managing Director and the Executive Committee of the respondent continued to monitor the situation closely leading to a decision, eventually, to close down a number of areas and in particular the Corporate Advisory Unit within PFAS, where the applicant was employed. 71 Mr Whitehead had been involved in the recruitment of the applicant in that it was he that had finally signed off on a memorandum to the Managing Director seeking the Managing Director's approval to appoint the applicant. At that stage there was a culture in place within the respondent to the effect that because of its poor financial position, no new staff were to be employed without the Managing Director's consent. 72 During the course of cross examination Mr Whitehead was examined closely about the dynamics within the respondent at the time that negotiations commenced with the applicant which led to his employment. The applicant had been led to believe that he would be able to work in with the respondent's broking arm, First State Securities. Presumably this was in the area of cross selling and exploitation of synergies. Mr Whitehead conceded that the applicant was not told that at the time of the applicant's employment consideration was being given by the Bank to closing down First State Securities. However he said that First State Securities was a small organisation only and that without growth, there would have been little opportunity for the applicant to have exploited its customer base. Mr Whitehead also conceded that at the time of the applicant's employment the performance of the PFAS group as a whole was very poor and the applicant was not told this. The applicant was also encouraged to believe that the Bank had a long term commitment to its Advisory Division and that the Managing Director was personally committed to this. 73 In terms of the redundancy package offered to the applicant Mr Whitehead said that the respondent did not have at that stage a formal policy in relation to redundancy. However the applicant's package was consistent with a formal policy introduced during the latter part of 1990. The determination of the applicant's package was based on the fact that he was given notice in June 1990 that his long term employment prospects were uncertain. 74 Mr Whitehead was also closely cross examined in connection with his failure to arrange alternative employment for the applicant. It was Mr Whitehead's evidence that the only positions then available with the respondent required a great deal of experience in lending because the positions involved dealing with and managing non-performing loans. The necessary skills in this area involved an analysis of and determination about the viability of the borrower's business and whether and what steps were available to either allow the borrower to trade out of its difficulties or to rationalise its assets in order to discharge its liability to the respondent. Mr Whitehead was of the opinion that the applicant's talents did not extend to such expertise. 75 It is also necessary that I traverse in some further detail the evidence concerning the activities of the applicant to secure an alternative income source consequent upon the termination of his employment. I have already referred to the fact that the applicant made representations to the respondent that it should withhold taking action to call up his loans because of the possibility that he would be able to derive income from a number of financing proposals with which he was engaged. He asserted throughout the relevant period that he was actively involved in this process. A "financing proposal" prepared by the applicant and submitted by him to the respondent which appears to have been prepared in about February 1991 contains details of a number of projects with which the applicant was involved which he had hoped would generate income for him either by way of fees or commission. That document details 14 transactions with which the applicant was involved and which he anticipated would generate fees for him. These proposals included the creation of a consortium to acquire a high profile Australian retailer, involvement in the flotation of corporations on the Sydney Stock Exchange, involvement in equity raisings and the like. 76 The document also made comment about the applicant's house at Cremorne. It said that he had contemplated selling the house in the past but had put this off because of the proximity of the house to the school attended by his partner's daughter. It noted that the applicant's equity in the house "is in excess of half a million based on current market." The document went on to say that the applicant would "definitely" sell the house if required. He said that this would occur if his position had not turned around by 1 June 1991. THE APPLICANT'S CLAIM 77 The applicant alleged that his contract of employment with the first respondent was unfair for the purposes of s 106 of the Act. In essence the applicant asserted that he was head hunted by the respondent and induced to take up employment with the respondent because the respondent was committed to merchant banking and in particular the corporate advisory area and that it had sufficient resources including the capacity to source new merchant banking business and the ability to interact with First State Securities Ltd to make the corporate advisory area and the respondent's corporate banking division viable. As conceded by Mr Whitehead the applicant was told that the respondent had a well established client base of mid-sized companies who could be targeted as a client base for merchant banking transactions as well as organisations that were not then existing clients of the respondent. The applicant was also told, as conceded by Mr Whitehead, that the respondent had a strategic plan to provide a full range of banking and non-banking financial services including fee based services. The respondent had an interest in building up its Corporate Advisory Division and a long term commitment to that business all of which enjoyed the full commitment of the Managing Director. 78 It was asserted that these assertions were made against a background of poor performance by the respondent which must have cast some cloud over the viability of the corporate banking business. In any event the respondent closed the PFAS in mid-1990. Even though the applicant was given notice of the likely closure in June 1989 and his termination of employment did not take effect until 14 September 1990, the applicant was led to believe until the very end that there was a possibility of alternative employment being found for him. 79 The applicant was given one month's written notice of termination on 14 August 1990 and on termination was paid, in effect, eight weeks pay, four weeks by way of severance payment and four weeks in lieu of notice. The severance pay was calculated on the basis of the applicant's salary package of $113,000. The four weeks pay in lieu of notice was calculated on his base salary of $79,960. 80 In addition, it was alleged that the respondent on termination failed to deal fairly with the applicant in terms of his concessional housing loans by initially charging interest in excess of the concessional rate and by failing to continue to afford a concessional rate until the time of discharge of the loans. 81 All of these circumstances both individually and in the aggregate, it was said, constituted unfair conduct on the part of the respondent in the context of his contract of employment. It was further submitted that this was compounded by the failure of the respondent to arrange alternative employment for the applicant, especially as there had been a commitment to a long term career. 82 Although, as I understood his submissions, Mr Fernon of counsel who appeared for the applicant did not specifically rely on the recent majority decision of a Full Bench of this Court in Reich v Client Server Professionals of Australia Pty Ltd [2000] NSWIRComm 143, I am bound by the judgment of the majority members of the Full Bench. The majority of the Bench (Wright J President, Walton J Vice President and Hungerford J) in a joint judgment held: In other words, it seems to us, in finding a contract (contract or arrangement, or any related condition or collateral arrangement) to be unfair, that may be supported because it became an unfair contract due to the conduct of a party at the time of the termination of the contract which enabled a finding that a contract which could or did so operate was relevantly unfair. It would then be open to declare the contract void or to make an order varying its terms in an appropriate way, with as to either form of relief a consequential order for the payment of money considered to be just in the circumstances. We have to say we find nothing surprising in that reasoning in terms of the operation of s 106 and, indeed, if it were otherwise then the whole jurisprudence developed in relation to the unfair contracts provisions in the industrial legislation over more than three decades would be effectively negated. Indeed, as to the conduct of parties, s 106(2) not only recognises such development in the cases but emphasises it by express statutory provision. (para 24) 83 This reasoning was repeated in the course of the joint judgment. For example at para 27 their Honours said in part: "….to us it seems an utterly arid exercise in semantics to find conduct as part of the operation of a contract to be unfair but not thereby to find also the contract to be unfair because such unfair conduct was not permitted by the otherwise fair contract - we think it should be stated as plainly as it may be, and as we think the authorities and s 106(2) do, that a contract may be found to be unfair because of any conduct of the parties." At para 28 their Honours said: A contract whereby a person performs work in an industry (including as here a contract of employment as a species thereof) has as an inherent feature the behaviour or conduct of the parties for the contract to be able to operate. It is difficult, we think, in conceptual terms to separate the contract itself from the conduct of the parties in performing it. As Priestley JA, with whom Kirby P and Meagher JA agreed, observed in Rothmans Distribution Services Ltd v Full Court of the Industrial Court of New South Wales [1994] 53 IR 157 at 160, "how the terms of the contract operated in practice … necessarily means looking at … conduct … and to conclude that a contract which could so operate was unfair". What a contract of employment does is set the terms and conditions to govern the employment relationship; the contractual relationship is another term which may be readily used to describe it. If a party in the course of operation of the employment relationship were to act in contravention of the contract of employment, particularly by committing a fundamental breach thereof, then that may only mean that the contract otherwise was unfair in so allowing or not preventing such unfair conduct or, indeed, in failing to make appropriate provision in the event occurring. In any of those situations, we think it clear that s 106 could be called in aid by the aggrieved party to obtain relief. We repeat, the section should not be construed to the contrary and as would protect the wrongdoer. (para 28) 84 In conformity with the expression of opinion of the majority in Reich it is only necessary that I find in the circumstances of these proceedings that there was unfair conduct on the part of the respondent and it is not necessary that I relate that conduct in any way to any terms of the underlying contract of employment or to any of the provisions of any arrangement or related condition or collateral arrangement. 85 The relief sought by the applicant in these proceedings maybe summarised as follows: 1. Variation of the contract of employment to provide for appropriate provisions relating to termination of employment. In this connection he sought compensation for the loss of twelve month's salary in lieu of notice and further compensation for severance pay equivalent to twenty four month's salary. The salary was said to be at a level of $120,000 pa. 2. Variation to the housing loan provisions to cap interest at 6% for the whole of the period of the loan, which would require payment of $33,571 by the respondent to the applicant. 3. Compensation for the loss of the applicant's equity in his Cremorne property because he was forced to sell it by reason of the premature termination of his employment. This was quantified at $1,050,000 based on valuation evidence. 4. The payment of $9,230,77 being compensation for the loss of annual leave during the period of notice. 5. Compensation for pain, suffering and psychological damage which the applicant suffered as a result of the premature termination of his employment and the consequent personal difficulties that this caused him. WAS THERE ANY RELEVANT UNFAIRNESS? 86 The applicant's contract of employment was the subject of written terms which provided for termination of employment on one month's notice. In any event, as I have previously indicated, the applicant was given one month's written notice and was paid severance pay of four weeks based on his salary package of $113,000 and four weeks on his base salary of $79,960. 87 In determining whether there was any unfairness it is necessary to determine what is reasonable notice for the purpose of ascertaining what notice should have been given and/or what moneys should have been paid in lieu of notice on termination of employment. 88 The matters which are taken into account in making such a determination are well established and I need not repeat them. In connection with the applicant's position I note that he was employed at a reasonably senior level in the respondent's operations. The applicant submitted that he was head hunted into the position and that this should be taken into account. The respondent submitted that all of the relevant documentation indicated that the applicant had been made redundant by his prior employer the Citibank Group. I am of the opinion that it is not necessary to determine whether or not the applicant had been made redundant by and his employment terminated at the initiation of Citibank. It is clear from documentation which became evidence in the proceedings that the applicant did not enjoy a good personal relationship with a particular person senior to him within the Citibank Group and that in any event the area in which he was employed at Citibank was being wound back. Whether or not the applicant's position with Citibank was tenuous or secure, there can be no doubt on the evidence that the respondent through its representatives sought the employment of the applicant into the PFAS Group and that certain representations were made to him, the nature of which I have already set out. It is also clear on the evidence that the position of the PFAS and the merchant bank activities within the respondent's operations had been under review for some little time prior to the applicant's appointment although it is clear on the evidence that no definite decision was made to cease the operations in this area for some months after the applicant's employment commenced. In any event, no indication was given to the applicant during the course of negotiations leading up to his appointment that the area into which he was to be employed was under review and that there was any concern within the respondent's operations in particular about the extent of the non-performing loans. I do not make this observation by way of criticism because there was a general malaise throughout the financial world at that time, and the applicant must have been aware of the state of the economy and what was happening generally to the businesses of financial institutions at that time. 89 In my opinion, where an employer such as the respondent in these proceedings determines to employ a person into an area of its operations which is under review, and then determines within a short time thereafter to close down the particular area of operations in which the person is employed, without providing appropriate alternative employment some additional compensation should be paid to a displaced employee over and beyond that which would normally be payable to such an employee. Obviously, length of service is usually one of the principal factors taken into account in determining what period of notice should reasonably be given on termination. The applicant had in reality only been employed for less than a year at the time that his employment was terminated and this would normally militate against the assessment of a lengthy period of reasonable notice. However in my opinion this factor is displaced in the particular circumstances which applied to the engagement of this applicant in the respondent's operations and the circumstances in which his employment came to an end. 90 In my opinion a reasonable period of notice in these circumstances would be six months. In fixing this period I take into account that the applicant should have been aware of the exigencies surrounding employment in the financial sector and the effect of fluctuating financial conditions on that sector. I also accept the respondent's evidence that there was no other position within its operations in which the applicant could conveniently be employed, and this factor has been taken into account in assessing the period which I have regarded as reasonable in all the circumstances of these proceedings. 91 It follows that the combined notice of termination and payment in lieu afforded to the applicant by the respondent was unfair. Its conduct was unfair accordingly, and in that the contract of employment permitted this to occur the contract of employment in its terms became unfair. 92 I should add that the payment in lieu of notice should consistently have been based upon the applicant's total salary package. Presumably the applicant enjoyed the totality of that package during the period of one month's notice actually given to him. There is no reason why, logically, the same basis for payment in lieu should not be utilised. Although the applicant claimed his salary package was $120,000 per annum the documentary evidence indicates that it was $113,000 per annum. I propose to adopt the documentary evidence. 93 The applicant also complained that the respondent's conduct in the manner in which it dealt with his housing loan after termination of employment was unfair. I have already described what occurred. Put simply, the respondent's personnel charged with administering the applicant's loans after the termination of his employment failed to apply the respondent's own policy provisions concerning the continuation of concessional interest rates to part of the loans for six months and the manner in which the loans should have been structured. No doubt, the failure of the respondent to pay an amount on termination of employment which equated with reasonable notice combined with the additional moneys demanded of the applicant exacerbated his concerns about his financial position and his ability to retain his home. I shall return to this aspect shortly. However I observe in terms of the payment of concessional interest and the restructuring of the loans, this was attended to belatedly by the respondent and the respondent's policy was eventually fully implemented. 94 The applicant claims that his entitlement to concessional treatment by virtue of his prior employment position as it impacted upon his loans should have continued indefinitely. I do not regard the imposition of a six month cut off period as being unreasonable and I decline to make any finding of unfairness in this particular regard. I observe also that apart from some inappropriate initial conduct on the part of two particular, and hopefully junior officers of the respondent, the applicant was eventually given a great deal of latitude with respect to the repayment of the loans. In making this observation I disregard some additional latitude which was inadvertently created by the respondent's inability to correctly formulate the initial notice of default. VARIATION OF THE CONTRACT OF EMPLOYMENT 95 Consequent upon the unfairness which I have found as earlier described, I intend varying the contract of employment to provide for termination upon giving reasonable notice or payment in lieu based upon the applicant's total salary package. 96 Even though I have found that the conduct of the respondent in handling the applicant's loans after termination of his employment was unfair, it does not appear to me to be necessary to vary the contract of employment or the loan agreement which is ancillary thereto because the respondent eventually complied with its own policy, a policy which I have found to be not unfair. JUST COMPENSATION 97 It is now necessary to determine what just compensation should be awarded to the applicant consequent upon the findings of unfairness which I have earlier made. They are confined to a failure to make payment of a reasonable amount upon termination and the failure to apply the Bank's policy to the housing loans for a period of six months. 98 It is obvious that the applicant must be paid by way of just compensation an amount equivalent to six month's notice based on his salary package of $113,000 pa. The respondent should, of course, be given credit for moneys paid. 99 The applicant claimed payment of a further amount for the loss of payment of annual leave during the notice period. Absent extraordinary circumstances, where an employer is entitled to terminate employment upon the payment of an amount in lieu of reasonable notice, the employment comes to an end at the time that the employment is terminated, and not at the expiry of the notional period of reasonable notice with respect to which the payment is made. Accordingly, the question of annual leave does not arise and it is not unfair to fail to pay annual leave after the date of termination of employment. Accordingly I reject this claim. 100 The applicant cast his claim for compensation as including a period of payment in lieu of notice and a further period by way of severance pay. For reasons which I have previously set out (see Vincent v Merrill Lynch (Aust) Pty Ltd (2000) NSWIRComm 160) it is my opinion that given an employee at a senior level in the respondent's organisation it is appropriate to aggregate payment in lieu of notice to cover both the termination of employment and the fact of redundancy. Accordingly the amount which I have previously determined to award by way of compensation is inclusive of the fact that the applicant was made redundant. 101 The applicant claimed an amount of $1,050,000 being compensation for the loss of his equity in the Cremorne property. He submitted that the amount of his equity in the home should have been determined as at the date of hearing and not as at the date that the property was actually sold. The fact is that the applicant despite his best endeavours was unable to secure any meaningful income for some time and was substantially in arrears in servicing his debt not only to the respondent but also to the ANZ Bank for some time before the home was eventually sold. Given that the respondent did not, in my opinion, overall conduct itself unreasonably with respect to the management of the applicant's loans (save for the failure to apply its policy concerning concessional treatment for six months) I cannot see any justification in awarding the applicant any compensation based on a notional equity appropriate as at the date of hearing of the proceedings. There seems to me to be no logical basis for selecting such a date. Mr Fernon submitted that this was the date that the loss crystallised by reason of the hearing. However, one could logically extend such a date beyond the date of hearing to make allowance for some time in the future, such as the putative date of the applicant's retirement had he remained in the employment of the respondent to, say, age 60. I reject this submission as having any appropriate or relevant basis for the purpose of these proceedings. I also reject any submission that any conduct of the respondent in its handling of the applicant's loans justified sheeting home to the respondent any loss calculated by reference to the loss of the applicant's equity in the Cremorne property. 102 This leaves for consideration the applicant's claim for compensation for pain, suffering and psychological damage. 103 I have previously set out the evidence relating to the applicant's psychiatric condition as given by Dr Harrison. It will be remembered that Dr Harrison did not treat the applicant initially and was first consulted by him on 28 January 1993. It was the impression of Dr Harrison that the applicant had "presented with an episode of Major Depression at the end of 1990 following the termination of his employment with the State Bank." The evidence of the applicant's former partner Ms Svenson was to the effect that the applicant appeared to be happy and outgoing until approximately June 1990 when she observed a change in his demeanour in that he became irritable, short tempered and extremely difficult to communicate with. She recalled 22 June 1990, her 30th birthday especially as a day where the applicant withdrew from her. It was her observation that the applicant's behaviour deteriorated towards the later part of 1990. 104 On the basis of this evidence I accept that the applicant suffered from clinical depression and I find that it is more likely than not that the applicant's symptoms of depression commenced in about June 1989 when he was told that the respondent was going to close down the area in which he worked. However at that stage the applicant was not advised that his employment was to be terminated and there was an indication from the respondent's personnel that every endeavour would be made to find alternative employment for him. Accordingly, at that time there was not any conduct on the part of the respondent that I would be able to characterise as unfair. The unfairness came at the time of termination in the manner which I have already described. At that stage the applicant's symptoms of depression had already commenced some two months previously. However it was the evidence of Dr Harrison that events such as the separation from the applicant's partner and the termination of his employment all contributed to the applicant's state of depression. 105 The applicant complained that by reason of his depression he was unable to look for and undertake alternative employment. However, his evidence and the documentary evidence to which I have previously referred indicates that the applicant was actively looking for alternative employment and undertook a range of consultancy duties involving what appear to be sophisticated financial arrangements. There is no indication from the evidence that he was unable to undertake this work by reasons of his depressive illness. 106 Accordingly, there must be some doubt as to whether the applicant's depression precluded him from obtaining employment up until the time he commenced a salaried position in February 1993. 107 There is no doubt from the evidence including the voluminous correspondence and other documentation that the applicant's dealings with the respondent in terms of the applicability of his concessional interest rate for a period of six months were a source of aggravation and concern for him. No doubt this added to his financial problems as did the failure of the respondent to pay him a reasonable amount in lieu of notice. The differential amount with respect to the interest factor is a few thousand dollars only, but the additional amount which I have found in fairness that the respondent should have paid on termination exceeds $28,000. No doubt this latter amount, if made available to the applicant at the time of the termination of his employment would have assisted him in coping with what quickly became dire circumstances. 108 In my opinion it would not be just, in the sense of being fair to both the applicant and respondent, to award moneys to the applicant by way of compensation based on any unfair conduct of the respondent having initiated the applicant's condition of depression. Nor would it be just to award the payment of moneys to compensate the applicant for any loss of income during any relevant period. However, subject to dealing with the question of jurisdiction to which I shall shortly refer, it is appropriate that the applicant be awarded some amount to compensate him for the distress which the deprivation of moneys which should in fairness have been paid to him caused him. There is no evidence that the deprivation of these moneys and some resultant distress which I find was caused by such deprivation exacerbated or aggravated the applicant's then existing condition of depression either on a short term or long term basis. However there is evidence that the respondent was or ought to have been aware of the applicant's financial position and the concerns and distress created by his lack of funds. Certainly there is evidence that the respondent was aware of these matters because they were raised during the course of interviews with officers with the respondent as well as in the applicants correspondence with the respondent. Of course, on the overall evidence the timely payment of these moneys which should, in fairness, have been paid to the applicant may only have staved off the inevitable for a period of time. Nevertheless this would have represented a period of less stress for the applicant. 109 In all the circumstances I propose to award him compensation in the sum of $15,000. 110 The question of jurisdiction to award compensation of this kind was considered recently by Hungerford J in Stonham v The Speaker of the Legislative Assembly of New South Wales (2000) 97 IR 325. Those were interlocutory proceedings. His Honour was not prepared to deny for the purpose of and at the stage of those interlocutory proceedings a power to award compensation in this area. Reference was also made by counsel to my judgment in Pullen v R & C Products Pty Ltd (1994) 60 IR 183 where, at 215.5 I discussed the power to award monetary compensation for "physical and mental injury" sustained by an employee consequent upon the termination of his employment. In all the circumstances of those proceedings I declined to order the payment of any monetary compensation. I discussed therein the decision of the House of Lords in Addis v Gramophone Co Ltd (1909) AC 488 and the decision of the High Court of Australia in Baltic Shipping Co v Dillon (1983) 176 CLR 344. The power set out in s 106(5) of the Act to make an order for the payment of money is circumscribed by two matters. Firstly the payment of money must be "in connection with" any contract which is voided or varied. Secondly the payment must be "just" in the circumstances of the case. 111 As I pointed out in Pullen, in most cases distress will arise out of the fact of termination of employment per se rather than the inadequacy of any moneys paid on termination or the inadequacy of any notice, in terms of what is reasonable. It is obvious that in most cases the termination of employment will of itself result in financial hardship to varying degrees. On termination of employment the applicant received $18,667 net of which $3,924 represented accrued salary and recreation leave. Accordingly the net eligible termination payment was $14,743. Information furnished to the applicant by the respondent at the time of termination indicated that the tax on an eligible termination payment was 31.25% of 5% of that payment. Accordingly if the applicant had been paid a further $28,000 as an eligible termination payment it would have amounted to less than $440. Whatever the taxation portion this would have resulted in a significant improvement in his financial position for some little time. Such an improvement is directly connected with the unfairness which I have found and would have been further improved if the respondent had correctly applied its own policy to the concessional loans. In my opinion given the particular circumstances of these particular proceedings it is just that the respondent pay some compensation to the applicant. I have already assessed the amount as $15,000. COSTS 112 The parties asked that costs be reserved, and I shall accede to this request. INTEREST 113 The applicant sought interest on the amount awarded. The respondent resisted the awarding of any interest. In doing so the respondent set out a timetable which, in part, indicated that the applicant's employment was terminated on 14 September 1990, but the summons for relief was not filed until 12 June 1996. The respondent moved for dismissal of the proceedings for lack of prosecution on 19 March 1997. Subsequently the applicant filed affidavits in support between 23 May 1997 and 7 April 2000. The hearing of the proceedings was set down for 10, 11 and 12 April 2000. An amended summons for relief was filed on 10 April 200 which resulted in the proceedings being adjourned. A further amended summons for relief was filed on 3 July 2000 creating a further adjournment and the proceedings resumed on 9 November 2000. In these circumstances, it was submitted that the applicant should not be entitled to interest on moneys awarded to him. Mr Fernon replied that the respondent had had the use of the moneys to which the applicant was justly entitled over a long period of time and, in fairness, the applicant should be entitled to the usual order for payment of interest. 114 No authority was cited by counsel with respect to this issue, nor was any submission made on behalf of the respondent that the awarding of interest should be deferred. 115 Although there has been a significant delay in the commencement and prosecution of these proceedings this will not of itself disentitle the applicant to receive interest. However, I have assessed the amount of compensation of $15,000 as at this date, applying such value judgment as is applicable as at this date. Accordingly, to award interest on this amount would involve some element of double counting given some inflationary trends between September 1990 and the date of this judgment. Accordingly I do not propose to allow interest on the sum of $15,000 but I do propose to order the payment of interest on the remainder of the moneys awarded in favour of the applicant. ORDERS 116 Consequent upon the findings of unfairness which I have set out earlier in these reasons for judgment I make the following orders: 1. The contract of employment between the applicant and the respondent is varied ab initio to provide that notwithstanding any other provision termination by the respondent shall be effected upon giving reasonable notice or upon payment of moneys calculated by reference to the applicant's earnings during that period of reasonable notice, based on the applicant's full salary package. 2. The respondent is to pay to the applicant the sum of $47,083 representing the payment of an additional five month's salary in lieu of notice based on a salary package of $113,000 pa. The respondent is to have credit as against this amount for moneys paid in lieu of notice and by way of retrenchment pay. 3. The respondent is to pay the applicant the sum of $15,000 in addition to the moneys payable under order 2. 4. The respondent is to pay to the applicant interest on the moneys referred to in order 2 above from 14 September 1990 to date of this judgment calculated in accordance with s 94 of the Supreme Court Act. 5. Costs are reserved. 6. Liberty to apply with respect to costs. _____________________ 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.