Industrial Relations Commission of New South Wales in Court Session CITATION : Randall v Baulkham Hills Shire Council [2003] NSWIRComm 162 GRAHAM RANDALL Applicant PARTIES : BAULKHAM HILLS SHIRE COUNCIL Respondent FILE NUMBER: IRC 6293 of 2000 CORAM: Schmidt J CATCHWORDS : Unfair contract - gratuity policy - refusal by Council to exercise a discretion in relation to gratuity payment - whether employee induced to resign by promise of payment of gratuity - claim not made out - whether gratuity policy operated unfairly - conduct - unfairness not established - application dismissed - applicant to pay respondent's cost as agreed or assessed LEGISLATION CITED : Industrial Relations Act 1996 Local Government Act 1983 CASES CITED : Jones v Dunkel (1959) 101 CLR 298 HEARING DATES: 05/12/2003; 05/13/2003 DATE OF JUDGMENT: 05/26/2003 APPLICANT: Mr R Moore of counsel SOLICITORS: Humphreys & Corish LEGAL REPRESENTATIVES: RESPONDENT: Mr A Searle of counsel SOLICITORS: Coleman & Greig JUDGMENT: - 28 - INDUSTRIAL RELATIONS COMMISSION OF NEW SOUTH WALES IN COURT SESSION CORAM: Schmidt J DATE: 26 May 2003 MATTER NUMBER IRC 6293 OF 2000 GRAHAM RANDALL v BAULKHAM HILLS SHIRE COUNCIL Application under section 106 of the Industrial Relations Act 1996 JUDGMENT 1 This application was brought under s106 of the Industrial Relations Act 1996, ('the Act'), by Mr Graham Randall, a former employee of Baulkham Hills Shire Council. The complaint advanced concerned the alleged unfairness of the employment contract, in circumstances where the Council refused to exercise a discretion to make an ex gratia payment to Mr Randall, upon his resignation. 2 The summons sought the following relief: (1) An order declaring that the contract of employment ("the Contract") entered into between the Applicant and the Respondent in or about November 1976 was an unfair contract. (2) An order that the said Contract be varied either ab initio or from such other time such as to provide for the payment of a gratuity or ex gratia payment upon termination howsoever arising based on 2 weeks for every year of service or part thereof with the Respondent. (3) Such other order or orders as appear appropriate to the Commission in Court Session including an order for compensation under section 106(5) of the Act. (4) Interest calculated at the rate set out in Schedule J on the Supreme Court Act 1970 (NSW) on any compensation awarded from date of termination. (5) Costs 3 The issues between the parties concerned the circumstances in which Mr Graham Randall came to resign his employment; the reasons for the Council's refusal to exercise a discretion in Mr Randall's favour in relation to payment of a gratuity under a policy which applied to long serving employees and whether any promises had been made to Mr Randall, that he would receive payments under the policy. 4 In the applicant's case evidence was called from Mr Randall. The Council called evidence from Mr Barker, retired Director, Services Delivery; Mr Coleman, Manager Technical Services, Mr Beaden, Team Leader Payroll and Mr Lathlean, Manager Operations, who was not required for cross examination. A number of documents were also tendered. 5 On resignation, Mr Randall had been employed for some 23 years by the Council. In 1996, as the result of a restructure, Mr Randall's position of senior overseer was regraded, but without any loss of pay. He held the position of maintenance support officer upon retirement. 6 Mr Randall came to resign from his employment, after he had been discovered by his supervisor, Mr Coleman, absent from work on the morning of Tuesday, 23 November 1999, in the company of another employee, Mr Hayward. The two employees were attending to some private concreting work which Mr Randall had undertaken the preceding Friday, on a day upon which he had not been at work. Mr Randall had borrowed a Council blower for that job, contrary to Council policy. 7 There was an issue between the parties as to whether or not Mr Randall had simply absented himself from work on the Tuesday, or whether he had sought to take time in lieu, prior to leaving his workplace that morning. There was also an issue as to whether he had sought and been granted time off in lieu, the preceding Friday, in order to attend to the private concreting work which he had undertaken. It was common ground that he had been away from work on a rostered day off on the Monday. There was no suggestion in the proceedings that Mr Randall had breached the policy applicable to the performance of private work, outside his employment at Council. 8 On 23 November, Mr Coleman went to Thornleigh to investigate advice received from another Council employee, that the preceding Friday a council truck had delivered Council equipment to the site of a private job. Mr Coleman had no information connecting Mr Randall with this report. When he went to the site that morning, during work hours, Mr Coleman observed Mr Randall and another Council employee, Mr Hayward, hosing down the concrete. The site was outside the Council boundaries, near Mr Randall's home. 9 Mr Coleman watched the two employees work at the site, and later drive off together in Mr Randall's car. He telephoned Mr Randall on his mobile phone, to be told that Mr Randall was driving Mr Hayward to the depot. Mr Coleman told Mr Randall that he knew where he was and asked him to pull over. When he approached, Mr Randall had gone to a tap in the front yard of a house and was washing his face and hands. He was sweating from the work performed. Mr Coleman asked him to return to the depot. 10 Mr Randall's evidence was that he had been asked to return home that morning, to turn off a neighbour's alarm. The neighbour had been called away from home, following the death of a parent. As he was leaving the depot, Mr Randall was asked by Mr Hayward, how his concreting job had gone. Mr Hayward had earlier helped with some plumbing work at the job. Mr Hayward was due to leave work that morning to see a doctor about a compensation matter and had finished his work at the depot, so Mr Randall asked him if he wanted to go with him. Mr Hayward agreed. They went to the site after attending the alarm. Mr Randall decided to take the opportunity to water down the concrete. 11 It was Mr Coleman's evidence that Mr Hayward was rostered to be cleaning the staff amenities building that day, between 7am and 2pm. He was due to leave work to attend a doctor's appointment, around 10am or 11am, but was expected to perform his ordinary duties until then. Mr Coleman discovered Mr Randall and Mr Hayward at Thornleigh at about 8.55am and observed them working there until 9.35am. Mr Hayward was not called to give evidence, he has since died. 12 It was Mr Randall's evidence that before leaving the workplace on 23 November, he had tried to speak to Mr Coleman, to seek his permission to take time in lieu to attend to the alarm. Mr Coleman was not at the workplace, so Mr Randall filled in a time in lieu form and left it on his desk. Mr Randall agreed in cross examination that he could have called Mr Coleman on his mobile phone to seek approval for his departure from work, but had not done so. While a copy of the form was annexed to his reply affidavit, there was an issue in the proceedings as to whether such a form had ever been provided by Mr Randall. Mr Randall's time in lieu claims required approval by Mr Coleman. Mr Coleman's evidence was that he had never seen it. Mr Randall's evidence was that he had completed the form after his return to work that day. Mr Randall explained that it was his practice to keep a copy of such documents. Given that explanation if correct, it was curious that there was no evidence as to such a form having been provided in relation to Mr Randall's absence on 19 November. 13 Mr Randall's wage records were not in evidence, but the relevant part of the record maintained by Council as to employees' time in lieu entitlements, was tendered. This showed that Mr Randall then had over 14 hours time which could have been taken in lieu, but that no time was debited in respect of his absence from work on 23 November, or indeed on 19 November. In cross examination, Mr Coleman's evidence was that he took no steps to ensure that Mr Randall was not paid for the time that he was absent from work on 23 November. This received no further attention after Mr Randall resigned from his employment. The proper inference from the evidence was that Mr Randall was paid for his absences on 19 and 23 November and that the 14 hours available to be taken as time in lieu was also paid out prior to the termination of his employment. 14 Upon his return to the depot Mr Coleman asked Mr Randall to prepare a note explaining what had happened that day and on 19 February, when he had borrowed a blower from Council to use on his private job. He did so. It was later provided to Mr Barker. Mr Randall's evidence was that he had also earlier given it to Mr Coleman, but Mr Coleman denied having seen it before he gave his evidence in these proceedings. On 25 November, Mr Randall met with Mr Barker, Mr Lathlean and Mr Coleman when he was questioned about what had occurred. No notes were kept of the meeting. There was an issue as to whether or not Mr Randall was asked whether he wished to have a union representative present at this meeting. Mr Randall denied this. The other witnesses disagreed. In cross examination, Mr Coleman's evidence was also that Mr Randall was offered the opportunity to have anybody else present he wished. 15 Prior to the meeting Mr Barker had conducted an investigation into the circumstances in which Mr Randall had come to borrow the Council blower on Friday, 19 November. He interviewed a number of the employees involved. The statements were in evidence and they were not required for cross examination. Mr Hayward was interviewed by Mr Lathlean and the Human Resources Manager. 16 During the meeting on 25 November, Mr Randall explained what had happened. Mr Barker left, in order to have a statutory declaration reflecting what he had said typed up. Mr Randall agreed with the declaration and signed it, although he felt stressed by what had been said to him at the meeting, especially by Mr Lathlean. At the meeting, while Mr Barker was out of the room, Mr Lathlean told Mr Randall that the situation was serious - akin to him having stolen $100 from the front counter at Council. In re-examination Mr Randall explained that he did not think that such a statement should have been made to him. Apparently Mr Randall did not, however, dispute what was said. 17 In cross examination, Mr Randall explained that he disagreed and did not believe, at that time, that his situation was serious, although he felt stressed by what Mr Lathlean had said to him. He did not, however, believe that he had done anything wrong. While he was aware of a 1996 memo, which prohibited the borrowing of Council's equipment by employees, he was also aware that other employees had borrowed such equipment, without difficulty, since then. He had done likewise. He had only borrowed a Council blower for a weekend, when it was not required by Council. In re-examination he identified two occasions when equipment had been borrowed by other Council employees, to his knowledge. Again, the evidence led by Council disputed this understanding in relation to employees borrowing equipment. 18 There were a number of issues as to what was said at the meeting on 25 November, by various of those present. For example, Mr Randall denied having acknowledged that he had done the wrong thing. There was also an issue as to whether Mr Randall told those with whom he was meeting that it was his intention to resign from his employment on 28 February 2000. Mr Randall's evidence was that he provided a signed resignation form at the meeting, showing that the reason for his resignation was his desire to spend more time with his ill wife. Mr Randall was then aged 63 years and eligible to take retirement. Mr Coleman had no recollection about this. Mr Barker's evidence was that resignation was not raised by Mr Randall until the following day. In cross examination, Mr Randall agreed that, while he was stressed at the meeting, he offered his resignation of his free will and nothing was done at the meeting to procure or induce his resignation and he was not pressured to do so. Nor was he promised any benefit if he resigned, nor any favourable consideration. He had been intending to resign in February for some three years and he wanted to avoid any trouble. 19 On 26 November, Mr Randall met again with Mr Barker, who informed him that the General Manager would accept a resignation, if he took his outstanding leave, with the resignation taking effect, on 4 January. Mr Randall's evidence was that he accepted, after being assured about payment of his gratuity. Mr Barker denied this. Mr Barker amended Mr Randall's resignation form to 4 January, Mr Barker signed the form and he left Council to go on leave on that day. Resignation not only avoided a formal investigation into these matters by Council, but resulted in payments being made under a sick leave policy, which would not have been available, had Mr Randall been dismissed for misconduct. Council accepted that in terms of the sick leave policy, Mr Randall's resignation amounted to a retirement. 20 While it seems unnecessary to resolve whether Mr Randall proffered his resignation on 25 or 26 November, an important issue in the proceedings was what Mr Barker told Mr Randall at the second meeting, about payment of the gratuity on his retirement. Mr Randall's evidence was that: 'I subsequently went to John Barker's office at about 12.30pm. Only John Barker was there. He handed to me a resignation form which had already been filled out. He said to me: "The General Manager has agreed you can resign on the 4th January, 2001 and keep your Council car until then. You'll also be on call until then." I said: "What about my gratuity John?" He said: "At this stage I wouldn't worry about it. Fill in an application toward the end of the year and there should not be a problem. At worst you'll get the same deal as Barnard."' 21 In cross examination, Mr Randall made clear that the resignation from was the one that he had earlier filled out himself and provided to Mr Barker. 22 Mr Barker's evidence was that: 'With respect to paragraph 26 of the Randall affidavit, I recall my meeting with Graham Randall on 26 November 1999 (a Friday, not 27 November as stated in Mr Randall's affidavit). I had asked Mr Randall to provide me with his written response to the matters previously raised with him. I deny that I gave him a resignation form. He gave me the written report which is annexure "F". Mr Randall then said "What happens now?" I said "I will refer the matter to the General Manager to decide if there should be a formal enquiry under the Award." Mr Randall said "I have been considering retiring because my wife is ill. I have filled out a form", and he handed me a resignation form dated 25th November 1999 which indicated that he would resign effective 25 February 2000. I said to him "I have had preliminary discussions with the General Manager who is prepared to accept a resignation, but only if it becomes effective as soon a your annual leave entitlements are used up, which would be 4 January if you start from now". He said, "OK" and I altered the date on the resignation form and Mr Randall initialled that change. Annexed and marked "H" is a copy of that form. He then said to me, as he was leaving the office, "What about my gratuity?" I said "If you apply now, there is no chance, but if you leave it a while there might be some chance. I said this because I felt that there was a lot of heat in the issue at that time. The question of the gratuity was not an issue which had been raised before, or an issue to which I had given any prior thought. My response was given on the spur of the moment and off the cuff. As an off the cuff comment, I felt that when the heat had gone out of the situation, there might be a small possibility of a gratuity being paid. The decision was not mine but for Council itself. I could only say what might possibly occur. With respect to paragraph 34 of Mr Randall's affidavit, I deny that the issue about the gratuity came up before Mr Randall tendered his resignation. It was only after he resigned that he raised the issue as an incidental matter, as I have described. 23 In cross examination, Mr Barker's evidence was that Mr Randall raised the question of the gratuity only in passing at the end of the meeting. 24 Mr Randall adhered to his version of these events in his reply affidavit. While his evidence in cross examination differed in some respects from his affidavit evidence, he did not depart from his version of these events. He agreed, however, that it was he who raised the question of the gratuity. Mr Barker was also not moved from his version of these events in cross examination. 25 The gratuity policy gave Council discretion to pay long serving employees with satisfactory service a gratuity on retirement and in certain other circumstances. 26 In late December, Mr Randall made a written application to Council to be paid a gratuity under the policy. Mr Barker prepared a recommendation to Council, together with Mr Mead, the General Manager. The General Manager's recommendation was that no gratuity be paid. Mr Barker's evidence in cross examination was that Mr Mead insisted that the recommendation be to this effect. Mr Barker's view was not explored in cross examination, other than by reference to a comparison sought to be drawn with the treatment of another employer, Mr Barnard, who had retired earlier in 1999. Mr Barker was sympathetic towards Mr Randall and took steps to ensure that he was paid in accordance with the sick leave policy on his retirement. Whether this was necessary was, however, debatable, given the terms of that policy. 27 Mr Randall's written application for the payment, which detailed his years of service with Council and the reasons why, in his opinion, the gratuity should be paid, was not put before Council. That application, like the recommendation made to Council, did not go into the detail of the events which led to his resignation. 28 The recommendation to Council provided: Graham Randall commenced employment with Council on 29th November, 1976 as an Overseer. He was appointed as Senior Overseer in 1989 and in 1996 he was reclassified as Co-ordinator - Civil Maintenance Unit, following restructure of the then Engineering Services Division into work teams. The reclassification reduced the grading and responsibility of his position and whilst there was no reduction of salary through this process, there was a loss of status which was accepted by Graham (although it now appears that there was some underlying concern). For the last 10 years, he has been the primary after hours contact for the public, Police and Roads and Traffic Authority of all road and drainage problems. He has also handled many other matters relating to the Council, outside of his employment role. Whilst he was paid the appropriate after hours allowance for this service, he often complained that it was not recompense for the time involved. Over the last few years there has been some concern that he was involved in some private works but this could not be substantiated. On Friday, 19th November, 1999, Graham rang in to say that he was sick and that he would not be coming to work. Later that day he arranged for an item of small plant belonging to Council to be delivered to a construction site on which he was working at Thornleigh. Following an investigation into this incident, Graham submitted his resignation. This is considered to be a most unfortunate error of judgement but there is concern the evidence on this occasion may have been just the 'tip of the iceberg' in misuse of his position for improper personal gain. 29 Mr Barker's evidence was that Mr Mead was the author of the final paragraph above. Mr Mead was not called to give evidence. The basis for the concern that the events of 19 November might have been just 'the tip of the iceberg', was not revealed in the evidence, which made clear that these matters were never raised with Mr Randall and nothing of that kind appeared on his record, other than in relation to the events of 23 November. Mr Barker wrote the other words quoted from the recommendation. He was not cross examined as to how a concern had arisen, that Mr Randall was involved in private works. The relevant policy was in evidence. Mr Randall's evidence did not explore any private work in which he was involved, other than on 19 and 23 November. 30 Council accepted the recommendation and declined Mr Randall's request. 31 Mr Randall's evidence was that he understood that only one other employee to whom the gratuity policy applied, had not received the usual two week payment. This was Mr Barnard, who had been paid one week per year of service. This understanding was incorrect. Mr Randall also did not believe that he had been involved in misconduct of the kind in which Mr Barnard had engaged in and so, in his view, should have received at least the same treatment as Mr Barnard. 32 Mr Barker's evidence was that there were at least seven other employees to whom Council had refused to pay any gratuity under the policy. Their circumstances were not revealed in the proceedings. The case of Mr Barnard was explained to have involved a worker's compensation claim, supported by medical evidence, where total and permanent incapacity had been claimed. Video evidence showing Mr Barnard performing work inconsistent with such incapacity had been received in evidence in the proceedings, the claim had been dismissed and Mr Barnard directed to return to employment. Council had not sought to dismiss Mr Barnard from his employment in those circumstances. It was required to re-employ him. He was found a clerical position at Council, in which he had worked diligently for more than a further five years. On retirement the view taken was that while his record was not unblemished, he had redeemed himself sufficiently to permit a one week payment to be made under the policy. Mr Barker made reference to voluntary work undertaken by Mr Barnard, which had been taken into account by Council in concluding that he had partially redeemed himself. The parties' respective cases 33 The case advanced for Mr Randall by Mr Moore of counsel was that the question to be determined was whether the gratuity policy had operated unfairly, in the circumstances revealed on the evidence. Particular reliance was placed upon the comparison between Mr Barnard's circumstances and those of Mr Randall. 34 It was argued that it was clear that Mr Randall fell within the class of employees eligible for consideration under the policy. Prior to the events of November 1999, he had an unblemished record. In 1998, he had been recognised for outstanding service to Council. On retirement, he received the benefit of payments under the sick leave policy, for untaken sick leave. Under the gratuity policy three classes arose. Those paid two weeks those paid one and those refused any gratuity. The evidence showed that those with unblemished records received two weeks. Mr Barnard received one, in the circumstances of his blemished record. Mr Randall did not consider that his conduct warranted any different treatment. It would not be of any greater concern, so as to disentitle him to any payment. 35 While a different view had been taken by Council a problem arose because Mr Mead had not been called to give evidence. Council was informed in the recommendation, of the existence of the concern existing about Mr Randall. It followed that a Jones v Dunkel (1959) 101 CLR 298 inference arose, namely that Mr Mead's evidence would not have assisted the respondent's case any further than what was contained in the recommendation itself. A suspicion about Mr Randall had existed, but nothing had been established against him. 36 The recommendation to Council touched upon the events of 19 November. The evidence showed that the borrowing of the blower had led to other employees involved being disciplined, short of dismissal. Relevant notes had been placed upon their files. The recommendation did not touch upon the events of 23 November. It followed that those making the recommendation had decided that those events were not relevant to draw to Council's attention. The evidence showed that Council had taken no action about that matter. It followed that it did not form part of any blemish upon Mr Randall's record. 37 As to the events of 19 November, the evidence showed that Mr Coleman had made no issue about Mr Randall's absence that day. Mr Mead's description of Mr Randall's conduct, that it had been a most unfortunate error of judgment, must be accepted as having involved carefully chosen words. His conduct had not been described as involving serious and wilful misconduct. It followed that Mr Randall was a long serving employee with one isolated incident against him on his record. It could not be accepted that this would fairly disentitle him to payment of a gratuity. 38 The reference in the recommendation as to a concern that this error represented the 'tip of the iceberg' in relation to misuse of his position for personal gain, was a deadly set of words to have used, especially as those concerns could not be substantiated and they had not been raised with Mr Randall. 39 The mere fact of Mr Randall's resignation could not have precluded Council from conducting an investigation against him and resolving to terminate his employment, if misconduct was found. Rather, Mr Mead was prepared to accept his resignation as bringing the matter to an end. 40 The decision as to a gratuity was ultimately one of Council to make, but Mr Barker and Mr Mead controlled how recommendations went to it. Mr Barker's comment to Mr Randall at the time, of his resignation that he should wait to make his application, because at the moment there was heat being generated. Did this mean that Mr Barker and Mr Mead would ensure that no gratuity would be paid by their recommendation to Council? The evidence did not show whether any disagreement existed about the gratuity between Mr Barker and Mr Mead, but Mr Barker did not seek to dissuade Mr Randall from making his application. 41 There was also a question as to whether, in truth, any discretion existed to be exercised under the policy. At the least, the question of whether the discretion had been exercised fairly arose for consideration. The payment of the gratuity was notorious. The suspicions which existed about Mr Randall was not a sufficient basis to deny him any payment at all under the policy. The way in which the recommendation was put ensured that no payment would be made by Council and so the policy had operated unfairly. 42 The circumstances of Mr Barnard had, in this respect to be taken into account. To be entitled for consideration under the scheme at all, long serve had to have been given. While it appeared that seven employees had received no gratuity, their circumstances were not known. It was accepted, however, that while Mr Randall was truthful as to his understanding that only Mr Barnard had received less than two weeks pay on his retirement, Mr Barker would have a better understanding of the situation, given his position at Council. 43 As to other conflicts in the evidence, it was submitted that they had to be resolved on the basis of credit. It was accepted that the onus fell on the applicant to establish his case. It was submitted that Mr Randall would not be regarded as a person setting out to deceive the Court or his employer. In the alternative, a gratuity of one week per year of service was pressed, together with an order for interest from the date of application. 44 The case advanced for Council by Mr Searle of counsel, was that the evidence showed that the policy truly operated on a discretionary basis, with a decision made by Council on the advice of senior staff. The evidence had not established that the scheme had operated in the way claimed by Mr Randall. 45 It was submitted that consideration had to be given to the case advanced in the summons. The evidence had not established the claim that Mr Randall's resignation had been induced by promises about the gratuity. 46 Reliance was placed upon the recommendation put to Council. There reference was made to the wider concern existing about Mr Randall. Mr Barker's evidence disclosed that the investigations were brought to a close by the acceptance of the resignation. It was argued to be relevant that Mr Barker was not cross examined as to the basis of this concern. While the recommendation focussed upon the misuse of Council equipment, it could not be ignored that what was in evidence was the investigation conducted into the events of 19 and 23 November, which had also been explored in cross examination in the proceedings. This had showed that Mr Randall had been engaged in private work during unauthorised absences from Council and in circumstances where Council equipment had been used, contrary to the applicable policies. 47 These matters came to light and were investigated over three days, between 23 and 26 November. The resignation was proffered by Mr Randall during the investigation and accepted, bringing the matter to a close. 48 It was submitted to be relevant that in cross examination Mr Randall was adamant that the resignation came from him and was not raised by Council and was not induced by any promises made to him. This evidence was inconsistent with the claim advanced in the summons and his affidavit evidence, which like other aspects of the applicant's evidence, was misleading. The result was that it had been demonstrated in cross examination that the applicant's recollection was not reliable and it followed that his evidence could not be preferred to that of the other witnesses in the case of conflict. 49 It was also relevant that the circumstances of Mr Barnard and Mr Randall were not comparable. Mr Randall had occupied a position with managerial responsibilities. He had been aware of the policy against employees borrowing Council property and on 19 November had knowingly breached it. His only explanation was that others had done likewise. His evidence did not establish that the policy had been relaxed by Council. Council's case was to the contrary. Mr Randall's evidence as to his approach to the question of time in lieu, on 19 November and 23 November, also showed that he had a disregard for Council's policies in this respect. He absented himself from work without prior approval. There was conflicting evidence as to the steps he took to ensure that his time in lieu account was debited with the relevant hours. Given the conflicting evidence on these matters, Mr Randall's evidence could not be accepted. Mr Randall could have taken steps to ensure that his applications for time in lieu were in order. It was relevant that he did not do so, if in truth he had sought to take time in lieu at all. That Council did not seek to make any adjustment in his payment for these periods was understandable, given the short period of the investigation and the acceptance of the resignation, in resolution of the matters being investigated. 50 Also to be considered was the position of seven other employees who were denied payment of any gratuity under the policy. It had been demonstrated that Mr Randall's understanding as to this was inaccurate. This, too, had to be taken into account. 51 The nub of the case, it was submitted, was the claim that the events of 19 and 23 November were not such as to fairly permit the applicant to be deprived of a gratuity. These events involved the knowing transgression of the applicable policies. The explanation that the Council's policies were not enforced had not been made out. The conduct revealed a cavalier attitude to the employer and its rules, by a senior and responsible employee. No gratuity was warranted in the circumstances. The evidence demonstrated that the applicant had no automatic right to this payment. It required a positive decision by the elected Councillors. The explanations given for the applicant's conduct could not provide a proper basis for any exercise of discretion in his favour. Nor could the evidence justify a finding as to the relevant unfairness of the contract under s105 of the Act. Consideration 52 The case advanced in the summons raised questions of misrepresentation and unfairness. 53 The starting point is the policy of which Mr Randall seeks the benefit. It is a policy designed to provide an additional payment for long serving employees upon their retirement. The evidence as to how the policy was operated in practice was that Council exercised a discretion to pay a gratuity to eligible employees, calculated on 'the usual two week payment', either on retirement or in certain other circumstances, if they had an unblemished record. In the case of a blemished record, one week might be paid. In some cases Council declined to pay any gratuity. The policy did not specify the circumstances in which a reduced payment might be made, or when a payment might be refused. This was left to Council's discretion. In making a decision about an application for payment of a gratuity, Council had regard to recommendations coming forward to it from employees such as the General Manager, Mr Mead and directors such as Mr Barker. 54 It was conceded for Council that the discretion available to it under the policy might be exercised unfairly, so as to warrant relief under s106. It was, however, argued that Mr Randall had not demonstrated his circumstances to be such as to warrant any relief. 55 The summons alleged that Mr Barker had represented to Mr Randall that if he retired, he would receive a gratuity payment on the same basis as Mr Barnard and that this had induced him to resign. This claim was denied by Council, but persisted with by Mr Randall in his first affidavit. Mr Randall's evidence in cross examination, however, put beyond doubt that no such inducement had been held out to him. On his evidence, he proffered advice to Council of his intention to resign at the first meeting with Mr Barker, Mr Lathlean and Mr Coleman. He did so, on his case, the day before the question of the gratuity was ever mentioned. He had planned for over 3 years to resign on 28 February and preferred to resign, rather than to have an investigation into the events of 19 and 23 November proceed. The following day he accepted the General Manager's view that he should immediately take leave and resign on the expiry of that leave on 4 January. On that basis, the Council's investigation did not proceed any further. It follows that this aspect of the claim was not made out. 56 The other question which arises to be determined, is whether the gratuity policy operated unfairly in the circumstances of Mr Randall's retirement, Council accepting that his resignation amounted to such, given his age and years of service. 57 The policy applied only to long serving employees, engaged by Council prior to 1977. There was no issue that prior to November 1999, nothing adverse to Mr Randall was recorded on his file. Difficulties which had arisen had not been noted adversely against him. He had occupied a senior and responsible position at Council and had, in addition to his normal duties, been an after hours contact for Council for numerous years. He had been paid an allowance for this work. In 1998, he had been recognised for outstanding service to Council. Mr Randall said in his December 1999 application to Council for payment of the gratuity that the events of November 1999 involved 'an unfortunate incident in November 1999 which is now on Record'. No details or explanation were provided. 58 In the recommendation made to Council, the words written by Mr Mead described what had happened on 19 November as 'a most unfortunate error of judgment' on Mr Randall's part. Reference was also made to a concern that 'this occasion may have been just the tip of the iceberg in misuse of his position for improper personal gain'. The words written by Mr Barker in the report included that 'Over the last few years there has been some concern that he was involved in some private works but this could not be substantiated'. Mr Barker had supervised Mr Randall in his employment for over twenty years. Mr Mead was not called to give evidence in the proceedings and Mr Barker was not cross examined as to the basis for these concerns. 59 It was submitted for the applicant that so describing Mr Randall's position almost ensured that Council would accept the recommendation made, that Mr Randall receive no gratuity. What these concerns were, were not explained with Mr Barker in cross examination. Nor were they matters dealt with in Mr Randall's evidence. 60 The evidence suggests that other than the events of 23 November, to which no reference was made in the recommendation to Council, but which had plainly been the subject of investigation and consideration by Mr Barker and Mr Mead prior to the acceptance of Mr Randall's resignation, such concerns were never explored with Mr Randall. 61 The evidence as to Mr Randall's actions on 19 and 23 November, make it clear that he acted in breach of the policies applicable to borrowing equipment from Council and the operation of its time in lieu system. Mr Randall was a long serving employee, holding a senior and responsible position. He was free from direct control of his movements and despite some denials in cross examination, he was plainly well aware of the requirements of these policies. 62 Mr Randall's affidavit evidence was that over the time that he had worked at Council, it had been common practice for staff to borrow equipment 'for private use as they needed it, provided it was returned in the same condition that it left the Depot in.' I cannot accept this aspect of his evidence. Not only was it directly in conflict with the Council's 1994 Code of Conduct and the written directions to employees of 1996, which remained in force, as Mr Randall was aware, it was also contrary to the evidence led by the respondent, unchallenged in cross examination, for example of Mr Barker or Mr Coleman. 63 Mr Randall called no evidence to support his understanding. Given the evidence as to how the borrowing of the blower in question came to Mr Coleman's attention and the responses provided by other employees to Mr Barker, in his initial investigations of the matter, it can only be concluded that other employees were well aware that what had occurred was contrary to Council's policy. Mr Randall did not seek approval from his supervisor Mr Coleman to borrow this equipment and did not offer to pay for its hire. He approached the Depot Clerk, who located a blower. It was taken to his private worksite by Council employees using a Council truck. 64 The examples about which Mr Randall gave evidence in re-examination, for the first time, as to other employees using Council's equipment, were not put to the Council's witnesses in cross examination. I cannot conclude that the practice asserted by Mr Randall in relation to borrowing Council equipment existed, or that if the examples about which he gave evidence had occurred, that they were either known to, or condoned by the Council. To the contrary, I am satisfied that Mr Randall, like the other employees involved, was aware of the policy and his breach of it. 65 Mr Randall asserted in his affidavit evidence that at the second meeting, Mr Barker represented to him that if he retired, he would receive the benefit of the policy, at least on the same basis as Mr Barnard, who was paid one week's pay per year of service, not the usual two. Mr Barker denied this. His evidence was that he had not discussed Mr Barnard's circumstances at all and that Mr Randall had asked about the gratuity only as he was leaving this final meeting, after a departure date of 4 January had been agreed. The question of what was said at the meeting must be resolved on the basis of credit. I am satisfied, having heard the evidence of the witnesses, that on this point, Mr Barker's evidence must be preferred. 66 In cross examination, Mr Randall made clear that he had not raised the prospect of resignation in order to obtain favourable consideration under the policy, nor had any promises been made to him in relation to the payment of a gratuity, so as to secure his resignation. He agreed that he had raised the prospect of his resignation and had provided his resignation form of 25 November to Mr Randall on that day, before he raised with Mr Barker the question of his gratuity on 26 November. He wanted to avoid any further investigation into these matters. 67 The gratuity policy required a favourable decision by Council. It was not a matter for determination by Council management, although the practice was for a recommendation to be provided to Council. The evidence was that Mr Barker and Mr Mead collaborated upon the terms of the recommendation. Given the evidence, it cannot be concluded that anything in the recommendation was incorrect or misleading. 68 Not only had Mr Randall not acted in accordance with the policy relating to borrowing Council equipment, he had clearly not followed the policy applying to the operation of the time in lieu system. On 23 November, for example, he could have spoken to Mr Coleman before leaving his workplace. Mr Coleman was contactable on his mobile phone. Mr Randall's explanation, that he did not call Mr Coleman because he had left without advising Mr Randall of his whereabouts, leaving him in the lurch, responsible for looking after the work teams, was most curious. Mr Coleman was not answerable to Mr Randall, who, after all, was himself proposing to leave work, without Mr Coleman being advised that there would then be no-one to supervise those teams. 69 Mr Coleman's evidence about Mr Hayward's circumstances was not challenged in cross examination. It follows that Mr Randall took with him Mr Hayward, who was due to perform cleaning work for Council until his departure to a doctor's appointment later in the morning. Mr Randall then had him perform work at his private concreting job, when they both should have been at work at Council. This can only be regarded as having resulted in a position where Mr Randall had the benefit, at the least, of Mr Hayward's services, for that time, for personal gain. 70 Section 106 requires that regard be had to the parties' respective conduct, in coming to a conclusion about the unfairness alleged in respect of any impugned contract. 71 It is relevant that Mr Randall called no evidence from others employed at Council to support his claims and that he did not require for cross examination other employees, who had given statements and statutory declarations to Mr Barker, in his initial investigations. The use of Council property for Mr Randall's private purposes on 19 November, was first drawn to Council's attention by another employee, whose identity has been kept confidential. The declarations and statements made by other employees involved, made clear that they were aware of the prohibition against private use of Council property. Those employees were subordinate to Mr Randall and were disciplined following their involvement in these matters, although they did not have their employment terminated. 72 The evidence showed that the Council's 1994 Code of Conduct, which flowed from the requirements of the Local Government Act 1993, provided that the Council's resources must not be used for private purposes, unless authorised and proper payment made, where appropriate. This was further emphasised in a memo in 1996, which foreshadowed a separate policy on the matter, but confirmed that until that document was finalised 'I regret to advise that under no circumstances is Council plant, equipment and furniture to be borrowed by staff for private use.' There has been no separate policy developed and this prohibition remains in force. 73 The evidence showed that not only did Mr Randall borrow a blower from Council on Friday 23 November, when his own blower broke down, he retained it until the following Tuesday, when he returned to work. The blower was delivered to him at his request. It was delivered to Thornleigh, outside Council's boundaries, by use of a Council truck on which were a number of employees subordinate to Mr Randall. His evidence was that he had asked for the blower to be taken to Kellyville, inside the boundaries. Even such a use of Council's resources was plainly inconsistent with the applicable policies, as the statements made to the Council by these employees confirmed. 74 Mr Randall's evidence was that he preferred to resign, rather than to face the possibility of a formal investigation into these matters by Council. What such an investigation would have revealed, which was not revealed in these proceedings, if anything, is unknown. The recommendation made to Council to decline the gratuity sought by Mr Randall, referred to a concern which had existed for some time about Mr Randall which had not been able to be substantiated and concern that what had occurred on 19 November, was the 'tip of the iceberg'. As I have said, this issue was not explored in these proceedings, other than in relation to the events of 23 November. Those events and the evidence given in these proceedings by Mr Randall as to his approach to the policies applying to use of Council's resources and the time in lieu system, provided some explanation for those concerns. I do not accept that they can properly be ignored in considering the cases which the parties advance, as to the fairness of the contract here in question. 75 The evidence showed that having agreed upon resignation, Council treated Mr Randall's resignation as a retirement, thereby ensuring that he received the benefit of another policy, which permitted retiring Council employees to obtain the benefit of untaken sick leave, by a payment on termination. 76 The case advanced for the applicant criticised the approach adopted to the investigation by Mr Barker, particularly in failing to ensure that Mr Randall appreciated the gravity of what confronted him and that he had a union representative present. The evidence did not permit the conclusion, either that Mr Randall had not been given the opportunity to have a union representative present, or that the gravity of the situation confronting Mr Randall had not been made clear. Mr Randall's evidence about the first matter cannot be preferred to the consistent evidence to the contrary, of the others present at the meeting. As to the gravity of his situation, the evidence showed that this plainly did not elude Mr Randall. After all, he had been discovered by his supervisor, away from his workplace without authority, in the company of another Council employee, subordinate to him, working on a private job. He had been asked to explain himself and had been called to a meeting to deal with his use of Council equipment on that job. Mr Barker had pursued investigations with other employers. The problem confronting Mr Randall was obvious. It was confirmed to him at the meeting both by Mr Barker and by Mr Lathlean. It was also obviously appreciated by him beforehand, given the decision that he had by then already made, that he should reveal his long planned impending retirement, in order that this might help him to avoid the possibility of a formal investigation into his conduct, with unknown consequences. 77 This decision was made in circumstances where on the morning of 19 November, Mr Randall had telephoned Council, either to inform that he was taking sick leave or time in lieu. If it was the former, this was problematic, given that he was obviously not sick. In cross examination, Mr Randall explained this suggestion had only been a joke. If the latter, it was also problematic, because Mr Randall did not speak to anyone in authority to gain approval for such leave. Even on his own case as to how the time in lieu system operated in this section of Council, which the Council's evidence disputed, he should have done so. 78 Mr Coleman's evidence was that even when such time was taken on short notice because of some personal emergency, the practice was that the relevant manager was informed by the employee concerned, as soon as possible, so that the time taken was agreed and any work commitments were met. 79 Mr Randall did not speak to Mr Coleman on or before 19 November, but spoke that day to the Works Clerk. There was no evidence that any time in lieu form was later completed and the record showed no deduction for any such time. 80 As to the time in lieu form in evidence in relation to 23 November, Mr Randall's evidence was that he had left the incomplete form on Mr Coleman's desk before he left work and completed it upon his return. He denied having manufactured it later, after the Council had filed its affidavits. (A copy of the form was attached to his affidavit in reply). Mr Coleman's evidence was that he had never seen this form. It was certainly not acted upon by Council. 81 All of this evidence leads to the conclusion that the circumstances were such that Mr Randall had plainly been involved in misconduct. Whether or not it was sufficiently serious to have warranted his dismissal, need not here be resolved. Mr Barker's evidence was that an investigation into the matter would have involved an external person, appointed by the Department of Local Government. A number of outcomes were possible as the result of such an investigation. The view taken by Mr Mead was that Mr Randall should be permitted to resign and a formal investigation should not be pursued. As it was put in submissions for Mr Randall, Council need not have taken that course. 82 It was common ground that Mr Barker counselled Mr Randall to wait some time before he made any application for payment of a gratuity, because at the time of his resignation, in his view there was no chance of any favourable consideration of such a request. Mr Randall accepted that advice and did not make his application until the end of December. A question thus arose as to whether Mr Randall, having an undoubtedly blemished record, given the circumstances preceding his resignation, was fairly denied any gratuity under the policy, or whether fairness required that he should have received a one week payment, as Mr Barnard had received some months before. 83 Mr Barker was also involved in the consideration given earlier that year to Mr Barnard's circumstances. Some five years earlier the Council had taken the view that Mr Barnard should not be dismissed, despite what had occurred in the Worker's Compensation proceedings. Having then been retained in his employment for over 5 years, upon retirement Council took the view that Mr Barnard had somewhat redeemed himself. This led to the favourable consideration given to his application for a gratuity, which resulted in the one week payment. Mr Barker explained that the same conclusion was not available in Mr Randall's circumstances and that Mr Barnard was the only employee in respect of whom he had ever made such a recommendation. 84 The question of whether a contract is unfair or not does not depend upon whether this Court would take a different view to that of the employer, if faced with the same circumstances, but rather, whether unfairness of the kind falling within the definition in s105 of the Act has been established on the evidence. The onus to make out the case falls upon the applicant. 85 Had Mr Randall tendered his resignation in reliance upon any inducement from Council, that to do so would result in him being treated in the same way as Mr Barnard under the gratuity policy, a finding of unfairness, it seems to me, would have been unavoidable. While such an inducement was claimed in the summons, it was not made out on the evidence. Absent such an inducement, what remains was a senior employee, who, faced with the prospect of an investigation into the circumstances surrounding his undoubted misconduct, which the Council had learned of from another employee, preferred to resign rather than face the consequences of what an investigation might reveal. On Mr Randall's evidence that decision was made even before Council had determined to conduct such an investigation. That resignation benefited Mr Randall in other ways, which cannot here be ignored and which undoubtedly helped explain the attraction of that course to him. 86 Mr Randall's resignation having been accepted, it seems entirely understandable that the recommendation to Council did not suggest that he had been guilty of serious misconduct, but rather described his use of Council's equipment as an error of judgment. Reference was made to other concerns about Mr Randall, understandably, it seems to me, given the events of 19 and 23 November. Payment of gratuity was not recommended. 87 I cannot be satisfied in all these circumstances, that a refusal to pay a gratuity designed to reward long serving employees with unblemished records was unfair, even on the reduced basis claimed in the alternative. I am also not convinced that the comparison sought to be drawn with Mr Barnard, can make out the applicant's claim. Like Mr Barnard, Mr Randall's circumstances were plainly serious. Rather than face an investigation and work to redeem his position, however, Mr Randall preferred to resign. Mr Barker's evidence was that Mr Barnard was the only employee with a blemished record who had been paid a gratuity to his knowledge and that there were at least seven other employees who were declined payment of any gratuity by Council under the policy. 88 In his case, the applicant did not seek to explore the circumstances of the other employees denied a gratuity. Mr Barker's unchallenged evidence made clear that Mr Randall was not alone in Council's refusal to exercise a discretion in his favour under the policy, contrary to Mr Randall's understanding of the position. This, too, confirmed the conclusion that the necessary unfairness had not been demonstrated. Order 89 For all of the reasons given, the application must be dismissed. I so order. 90 The usual order as to costs would be that the applicant pay the respondent's costs as agreed or assessed. If the parties cannot agree on the terms of the costs order, the matter may be relisted. Such an application should be made within 28 days of today's date. ------------------------ 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.