Industrial Court of New South Wales CITATION: Gordon Meggatt v Australian Business Limited [2007] NSWIRComm 182 Applicant: PARTIES: Gordon Meggatt Respondent: Australian Business Limited FILE NUMBER(S): IRC6648 of 2004 CORAM: Kavanagh J CATCHWORDS: Section 106 - termination for serious misconduct - asserted act of sexual harassment at work social occasion - terms of contract fair - failure to define procedure in terms not unfair - fair procedures followed - conduct of investigation fair - no breach of contract - contract not rendered unfair by conduct LEGISLATION CITED: Industrial Relations Act 1996 Abboud v The State of NSW (Department of School Education) (1999) 92 IR 32 Applicant v Respondent, Print R1221, 1 February 1999 Bankstown City Council v Paris (1999) 100 IR 363 Beahan v Bush Boake Allen Australia Limited (1999) 93 IR 1 Briginshaw v Briginshaw (1938) 60 CLR 336 Byrne v Australian Airlines Ltd (1995) 185 CLR 410 Concut Pty Ltd v Worrell (2000) 103 IR 160 CASES CITED: Hawkins v Clayton (1987) 164 CLR 539 Ian Ueckert and Australian Water Technologies Pty Ltd [2000] NSWIRComm 123 Pastrycooks Employees, Biscuit Makers Employees & Flour and Sugar Goods Workers Union (NSW) v Gartrell White (No 3) (1990) 35 IR 70 Rose v Telstra Corporation Limited, Print Q9292, 4 December 1998 Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359 Simon Richard Lane v The Commonwealth Bank of Australia [2000] NSWIRComm 274 Sunbird Plaza Proprietary Limited v Maloney and Another (1988) 166 CLR 245 Sydney Water Corporation Ltd & Anor v Industrial Relations Commission of NSW & Anor (2004) 61 NSWLR 661 Truelove v Sydney Water Corporation Limited and anor [2005] 46 IR 253 HEARING DATES: 16/04/07,17/04/07,18/04/07,19/04/07,20/04/07,18/05/07,25/05/07 DATE OF JUDGMENT: 16 August 2007 Applicant: Mr D.H. Patch of counsel Solicitors: Mr R.W. Gillroy GWM Lawyers LEGAL REPRESENTATIVES: Respondent: Mr R.M. Goot AM SC Solicitors: Ms J.Ede Australian Business Lawyers JUDGMENT: - 52 - INDUSTRIAL COURT OF NEW SOUTH WALES CORAM: Kavanagh J Thursday 16 August 2007 Matter No IRC 6648 of 2004 GORDON MEGGATT v AUSTRALIAN BUSINESS LIMITED Application under s106 of the Industrial Relations Act 1996 JUDGMENT [2007] NSWIRComm 182 1 By way of Summons for Relief, Gordon Meggatt (the applicant) brought proceedings against his former employer Australian Business Limited (ABL) (the respondent), under s106 of the Industrial Relations Act 1996, pleading his contract of employment was unfair, harsh or unconscionable in its terms and/or through its operation. He seeks the contract be voided in whole or in part or be varied and relief by court order for just compensation. 2 On 12 March 2004, the applicant received from the respondent the following correspondence: STRICTLY CONFIDENTIAL AND PRIVATE 12 March 2004 Mr Gordon Meggatt 11 Morcombe Place Port Macquarie NSW 2444 Dear Gordon We refer to our meetings with you on Monday 8 March and Tuesday 9 March 2004 to obtain your responses to an allegation against you concerning your conduct in an incident that occurred at a work function on the evening of the 25 February 2004 at Ingleside in Sydney. As you are aware, ABL has conducted an investigation into the alleged incident, including by conducting interviews with the complainant Gail Bradford, witnesses to the incident and yourself. At our meeting with you on 8 March, the substance of the allegation against you and the accounts of the incident of relevant witnesses were put to you for your response and explanation of mitigating circumstances. You subsequently obtained legal advice and provided a further response to us in our telephone conversation with you on 9 March 2004. There was a further meeting with you and your legal representative, Bob Gilroy, on 9 March 2004 and subsequent correspondence between our solicitors. After careful consideration of all the relevant evidence, including your responses to the allegation, ABL has determined that the allegation against you has been substantiated. Specifically, ABL has found that you have sexually harassed another employee, Gail Bradford, by approaching her from behind and touching her between her legs in her genital area at the work function on 25 February 2004. This conduct of a sexual nature was unwelcome and made Gail feel uncomfortable and embarrassed. The unwanted physical touching could also constitute an assault. Your conduct exposes both yourself and ABL to claims of potential discrimination and sexual harassment and constitutes serious misconduct justifying instant dismissal. ABL does not accept that the comments and responses you made in our meeting and subsequent telephone conversation are mitigating circumstances that justify your misconduct. This includes your response that you were so drunk that you cannot recall engaging in the conduct. ABL has also taken into account the fact that you have previously received verbal counselling about inappropriate conduct of a sexual nature and a previous written warning concerning such conduct. At the time of receiving the written warning, you underwent one-on-one training in EEO and appropriate standards of conduct. You have also undergone the general ABL EEO training. ABL has a strict obligation to ensure the health, safety and wellbeing of all employees in the workplace. This includes ensuring that employees are not exposed to touching or other unwanted physical contact of a sexual nature or other forms of sexual harassment. Accordingly, your employment is terminated effective today, 12 March 2004. You will receive your statutory entitlements, being your accrued but untaken annual leave and wages owing, as set out in the attached termination advice. Yours faithfully (Signed) Tony Hoban Manager, Membership Network 3 An investigation had been conducted by the respondent into the asserted conduct of the applicant before sending this correspondence which, in effect, terminated or confirmed the termination of the applicant's contract of employment. 4 The applicant asserts the termination of his contract was unfair, as the terms relied upon were unfair and/or the procedures leading to his termination constituted unfair conduct such as to make the terms of his contract of employment unfair. The applicant asserts in his Summons for Relief filed 12 November 2004, the contract was unfair in that: (a) It permitted the respondent to terminate the Contract without any sufficient notice or payment in lieu of such notice. (b) It invested the respondent with significant discretionary powers which may and have been used to the substantial disadvantage of the applicant particularly in the circumstances relating to whether or not and how to investigate the complaint and relating to the termination of the Contract and/or the failure to continue the applicant's employment. (c) The applicant was at all material times in a position of unequal and inferior bargaining power in respect of his dealings with the respondent and was specifically in such a position at the time of termination. (d) It permitted the respondent to dismiss the applicant without conducting any fair and reasonable investigation in circumstances in which such an investigation would have revealed that the complaint was not made out or did not provide any reasonable basis for dismissal. (e) It permitted the respondent to fail to afford the applicant procedural fairness. (f) It permitted the respondent to dismiss the applicant as opposed to requiring him to attend appropriate counselling and continue in his employment. (g) It permitted the respondent to dismiss the applicant on the basis of conduct which if true had occurred in circumstances where the respondent had encouraged and condoned the drinking of alcohol that effected his judgement and actions. (h) It permitted the respondent to fail to give due consideration to the applicant's personal circumstance, length of service, experience, seniority and contribution to the respondent's business. (i) It was otherwise unfair, harsh or unconscionable and contrary to the public interest upon such grounds and for such reasons as the Commission may find. 5 The Summons also sought variation to the contract by including provisions which would, by their terms: (a) require the respondent to thoroughly investigate an allegation of sexual harassment and afford the applicant procedural fairness in doing so including but not limited to taking full account of the circumstances in which any alleged conduct may have been committed; (b) entitle the respondent to require the applicant to attend counselling (in a form that is reasonable having regard to the nature of the conduct and the circumstances in which it was committed) if such an allegation is proved and shall only entitle the respondent to terminate the applicant's employment if the applicant subsequently fails to attend counselling; (c) provide if the respondent suspects any ground specified in clause 15.1 of the Contract . . . applies to the applicant [the respondent] must conduct an investigation to determine whether the ground exists and in doing so must afford procedural fairness to the applicant and in making any decision whether to terminate the employment of the applicant; (d) provide that upon termination by the respondent of the applicant's employment for any reason the respondent shall give to the applicant one year's notice of termination or one year's payment in lieu of notice of termination and to do so by reference to the applicant's employment package. 6 The applicant relevantly claims the following relief in the Summons: As for the year commencing from the date of the termination that is 12 March 2004 . . .: (a) One years salary inclusive of amount previously salary sacrificed for motor vehicle including unfettered private use $104,000 superannuation (10% of salary inclusive of motor vehicle) $10,400 payment in lieu of bonus prescribed in contract of employment $22,880 ________ TOTAL $137,280 (b) . . . interest on the sum of $137,280 from 12 March 2004 until payment at the rate of 9% per annum. . . . . the wages payable for the year commencing on 12 March, 2005 as follows: (a) (i) One year's salary inclusive of an amount previously salary sacrificed for motor vehicle assuming 10% wage increase $114,400 (b) Superannuation $11,440 (c) Payment in lieu of bonus assuming 10% increase in bonus levels on 2004 wage figures $25,168 ________ TOTAL $151,008 (d) . . . interest on the sum of $288,288 from 12 March, 2005 until payment at the rate of 9% per annum. 7 In reply, ABL, the respondent, asserts the contract was fair in its terms and in its performance, with particular reference to the applicant's termination. The respondent asserts the terms of the contract were fair and it conducted an investigation in accordance with the contractual arrangements. It submits the applicant was accorded natural justice in the procedures followed in the investigation of an alleged incident and the applicant's employment was terminated by a decision of the respondent in accordance with, and not in breach of, the terms of his employment contract. 8 Mr D.H. Patch, of counsel, appeared for the applicant. Relied upon was the affidavit evidence of Gordon Meggatt, former ABL Regional Manager Mid-North Coast; Peter Newman, former Director of NSW North Coast TAFE and representative on ABL's Mid North Coast Regional Council. Mr Meggatt gave evidence and Mr Newman was called as a witness. Both were cross examined. 9 Mr R.M. Goot AM SC, appeared for the respondent. The respondent relied upon affidavit evidence from the following people, all of whom are currently employees or were former employees or clients of the respondent at the time of the alleged incident: Gail Bradford, ABL Manager Alliances, Associations and Navigation; Darren Cocks, ABL General Manager New Apprenticeships Centre; Mary Doherty, ABL Regional Manager, Central Coast & Sydney Metro; Monica Lisa Millar, former Relationship Manager of Illawarra Business Chamber; Kevin MacDonald, ABL General Manager Operations; Kathleen Bracken, ABL Senior Human Resources Manager; Susanne Zafir, ABL Executive Assistant to General Manager Operations; Timothy Jabez Lewis, former CEO Illawarra Business Chamber; Michelle Alison Todd, Illawarra Business Chamber Business Development Manager; Anthony Gerard Hoban, ABL Manager, Regional Sales Network and Geraldine Rigg, ABL General Manager, Human Resources. In addition, the respondent relied upon affidavit evidence from the following people, all of whom were councillors of ABL's Mid-North Council: Blair Timothy Christopher Montague-Drake, Director of Earth Images Pty Limited; Wayne John Lennox, Private Investor; Paul Andrew Fahey, Partner of Northcorp Accountants; Jo-Anne Border, Director of Border Financial Services Pty Limited; Susan Margaret Carroll, Director of Suebeach Pty Limited. The applicant required for cross examination nine of the 12 witnesses whose affidavits were relied upon, namely, Ms Bradford, Mr Cocks, Mr MacDonald, Ms Rigg, Ms Zafir, Mr Hoban, Ms Millar, Ms Doherty and Ms Todd. The Evidence 10 The applicant was first employed as an industrial advocate by the respondent in about 1996. He represented the respondent in the areas defined by the respondent as the Australian Capital Territory and the Southern Region of New South Wales. 11 In April 1998, on an interim basis, the applicant relocated to Port Macquarie to act in a relieving capacity as the Regional Manager for the Mid-North Coast. Some time after his arrival in Port Macquarie, the occupant of the position, Ms Orvard, left and the applicant assumed her position. The position of Regional Manager, Mid-North Coast required him to administer the region, which in 1998, was geographically bound to the north by Woolgoolga, in the south by Bulahdelah, with an arbitrary line along the Great Dividing Range but including the Northern Hunter townships of Gloucester, Stroud, Dorrigo and Wingham. 12 The nature of the applicant's job included managing the relationship between the respondent and its regional customers and key customer groups in the region. ABL not only represents the interests of its members in an industrial capacity but provides other services including a range of advisory, networking, lobbying and fee-for-service business products and services for its members and its clients. 13 Early in his regional management role, the applicant was given a business plan with a budget and a statement of strategic objectives, both of which he was required to meet. The applicant asserts that over the years he took on greater responsibilities in both the nature and extent of his duties and the geographic area for which he was responsible was significantly expanded. The responsibilities of the position therefore grew significantly. Over time, he took into his region New England and the far North Coast. From August 2002, he was also required to serve membership in the South East of Queensland. By 2004, his area also absorbed the NSW Western Plains District. Therefore, his area ranged finally into Queensland and the area west of New South Wales. 14 The applicant promoted the work of his employer, ABL, particularly in the area of industrial relations and employment relations, business development promotion, public relations and networking. I accept it was his practice, and one funded by his employer, to conduct an ongoing sequence of networking functions to which both new and prospective members were invited. 15 Mr Meggatt perceived a significant portion of his work to be driven towards gaining and holding new membership, as well as marketing and selling the various ABL services and products. He had a generous entertainment budget. He asserts the type of function he was required to attend not only involved in-house training programmes but also dinners, dances, promotional seminars, training seminars, annual meetings for staff and annual meetings for Councils, both at regional level and at State Council level. He says there was a generous spread of high profile entertainment within the regional network for the benefit of members and prospective members. I accept this assertion. He asserts alcohol was freely available at these functions and I accept this. It does not, however, necessarily require me to conclude that the respondent encouraged the imbibing of alcohol or encouraged the excessive use of alcohol. 16 The applicant had a good work history over his eight years of service. Only two incidents in this work history appear relevant. The first is referred to in a letter dated 16 December 1998 from the respondent to the applicant where the applicant received a written warning as to inappropriate behaviour. It reads as follows: 16 December 1998 Mr Gordon Meggatt Regional Manager, Mid North Port Macquarie. NSW Dear Gordon I would like to confirm our discussion this morning concerning incidents following the ABL Christmas Party this year. Although no formal complaint has been lodged, it was brought to my attention that you behaved inappropriately in relation to three female employees, and that this behaviour was unacceptable and unwanted. You indicated you were unaware you had caused any distress but acknowledged that this is obviously not the perception of the staff members involved in the incidents. We have agreed that I will communicate your apologies to the people concerned and your assurance that there will be no repetition of the unwelcome behaviour. I have now done this. All three have accepted your apology and your assurance. We further agreed that you will attend a workshop on Workplace Harassment which I will run in Port Macquarie in the last week in January 1999. I wish to make it clear that your actions were completely inappropriate and unacceptable in a member of ABL staff, in particular when that staff member is in a management position. Any repetition of the behaviours will result in disciplinary action which could include termination of your employment with ABL. (signed) (signed) Geri Rigg Kevin Collison Manager Human Resources General Manager, Operations (signed) Gordon Meggatt 17 Following this warning, the applicant was required to attend a special workshop on Workplace Harassment which was conducted by ABL in Port Macquarie in the last week of January 1999. The respondent asserts it was the applicant's behaviour which was the catalyst for the special workshop on workplace harassment. The applicant asserts it was a scheduled in-training course. However, also on 21 November 2002 and 15 May 2003, the applicant attended other training sessions in accordance with the respondent's anti-discrimination policies. These were scheduled training sessions. 18 The second relevant incident in the applicant's work history occurred on 7 November 2003 when Mr Meggatt was counselled by his superior, Mr Hoban, ABL Manager, Regional Sales Network, regarding inappropriate behaviour at an ABL Annual Dinner. A file note by Mr Hoban of this meeting relevantly reads: I gave Gordon feedback that his behaviour at the ABL Annual Dinner two weeks ago was seen by many present on the night to be inappropriate, due to his intense interaction with his new partner. Gordon acknowledged this was inappropriate. 19 Generally, the applicant got on well with his superiors and other employees. So far as he was aware neither Mr Hoban, Ms Bradford, Mr Cocks, Mr MacDonald nor Ms Rigg had an "axe to grind" with him. The Employment Contract 20 The applicant entered into a number of employment contracts over his eight years of service, the last of those contracts being signed on 30 August 2002. Relevant are the following clauses of the contract of employment: 3. APPOINTMENT, POSITION AND TERM 3.1 The Employer engages the Manager in the position of Regional Manager, Northern NSW (and in any additional or varied position or capacity as may be agreed by the parties) to provide the services and duties required by the position to the Employer or any Associated Companies in accordance with terms of this Agreement. The services and duties to be provided include the services and duties referred to in clause 4 and Schedule 2. . . . 4. MANAGER'S DUTIES 4.1 The Manager must: . . . (e) act in the Employer's best interests; and (f) comply with all policies of the Employer in place from time to time including, but not limited to, policies relating to equal employment opportunity and the use of the internet; . . . 15. TERMINATION FOR CAUSE 15.1 The Manager's employment may be terminated by the Employer at any time without notice if the Manager: (a) is guilty of serious misconduct; (b) breaches clause 12, 13, 14, 18, 21 or 22; . . . 15.2 If the Employer suspects any ground specified in clause 15.1 applies to the Manager, it may, in its sole discretion choose to conduct an investigation. 15.3 During the investigation, the Manager may be suspended from performing the Services under this Agreement for a period of up to one month. An (sic) Manager suspended under this clause will continue to receive the Salary provided under the Agreement for the duration of the suspension, but the Employer shall be entitled to exclude the Manager from all offices of the Employer or its Associated Companies during the period of suspension. 15.4 At the conclusion of the suspension, the Manager will be informed as soon as is reasonably practicable of the outcome of the investigation and whether the Employer chooses to exercise the rights available to it under clause 15.1. 15.5 If the Manager is terminated, pursuant to clause 15.1, no payment in lieu of notice or otherwise will be made to the Manager. The Manager will be paid his statutory entitlements only. 16. TERMINATION OTHER THAN FOR CAUSE 16.1 Either party may terminate this Agreement by giving the other one months' written notice. 16.2 The Manager acknowledges and agrees that the notice period in clause 16.1 is fair and reasonable in the circumstances and has been discussed with the Manager. . . . 21. EQUAL EMPLOYMENT PRACTICES 21.1 The Manager will adhere to the Equal Employment Opportunity policies and practices as published from time to time by the Employer. Discriminatory practices, including sexual harassment, are unlawful. The employer will not tolerate discriminatory behaviour and any such conduct may lead to the Termination of Employment for Cause (See clause 15). 21.2 For the purpose of clause 21.1, sexual harassment includes unwelcome behaviour of a sexual nature that has or could have a detrimental effect on the conditions of an individual's employment, job performance, opportunities or well being. This includes any unwelcome sexual advance or request for sexual favours. . . . 21 Before signing the contract, the applicant had possession of it for 17 days. I accept he read it, understood it and agreed to the terms and conditions of the contract. 22 Under the contract, the applicant was required to comply with all policies of the employer. In particular the "Sexual Harassment Policy" of the respondent is relevant. The policy states: Introduction Australian Business Limited will take prompt and appropriate action to investigate and resolve any alleged or suspected incidents of sexual harassment. Appropriate corrective and/or disciplinary action, including the possibility of dismissal, will be taken in all confirmed cases. . . . Definition Sexual harassment can be defined as: 'any unwanted, unwelcome or uninvited behaviour of a sexual nature which make (sic) a person feel humiliated, intimidated or offended'. . . . Some Examples Examples of possible sexual harassment may be: . . . · leering, patting, pinching, touching or unnecessary familiarity · intrusive questions about sexual activity · sexual assault . . . 23 Under his employment contract, the applicant could be terminated, without notice, if found guilty of serious misconduct. The contract acknowledged that if an investigation was needed, the respondent held a discretionary power to conduct such an investigation. The procedures to be followed during that investigation were not defined and, by inference, such procedures were within the discretion of the respondent. If the manager was terminated pursuant to clause 15.1, the termination could be summary - without notice. Under the contract the employee was bound by the employer's Equal Opportunity Policy, which incorporated its anti-discrimination policy. Misbehaviour under this policy could lead to termination. The contract identified sexual harassment as a matter which could lead to termination. The Incident 24 On 25 and 26 February 2004, the applicant attended a general in-service sales training conference organised by the respondent, at Ingleside, in the Westpac Training Facility. The respondent ran regular lockdown events where various staff were invited to participate in specific training and development programmes. There were 31 formal attendees. A number of other people associated with ABL, clients or service providers, attended the dinner on 25 February 2004. 25 The educational aspect of the seminar began at 8am on Wednesday 25 February 2004 and concluded at 5pm (approximately). Pre-dinner drinks were served in the bar adjacent to the restaurant from 5.30pm. The formal dinner began at 6.30pm. No alcohol was served until 5.30pm. 26 Following the conclusion of the dinner, most of the employees and their guests moved from the restaurant area to the games room lounge area. It held a pool table, a table tennis table and various lounge chairs. There was access to an adjacent bar. Some of the participants chose to play table tennis or pool, others sat around in the lounge area enjoying the social occasion. By 11.30 pm most returned to their rooms. There was unlimited access to alcohol from the bar during the evening from 5.30 pm to 11 pm. It was while in the games room that an incident allegedly occurred between the applicant and a fellow ABL employee, Ms Bradford. 27 The morning following the conference dinner, at approximately 7.30 am on Thursday 26 February 2004, Ms Bradford was on the balcony outside the games room having coffee and a cigarette with Mr MacDonald prior to going to breakfast. Mr MacDonald commented Ms Bradford did not seem herself and inquired if everything was okay. Ms Bradford then recalls she said in reply to his inquiry: No, it's not. Gordon grabbed me when we were playing pool. Mr MacDonald asked where she was grabbed and Ms Bradford replied: When I was bending over to take a shot, he actually grabbed me between my legs. I'm thinking about telling Tony [Hoban]. Mr MacDonald advised Ms Bradford to report the incident. 28 On the day following the conference, Friday 27 February 2004, Ms Bradford met with Mr Hoban, the appropriate person to report the incident, as he was the applicant's superior. Ms Bradford recalls she said to Mr Hoban: While we were at the Ingleside conference, Gordon grabbed me between my legs. I was bending over the pool table at the time. and: Anyway, I thought I'd let you know - I want to report this to HR and make an official complaint. As he reports to you and as much as I'd like to see him fired for his actions, it may have repercussions throughout the organisation . Mr Hoban encouraged her to formally report the incident. 29 On the same day, Ms Bradford approached Ms Rigg, the General Manager, Human Resources and recollects she said: While we were at the Ingleside conference, Gordon grabbed me between my legs. I was bending over the pool table at the time. I wish to make a formal complaint about it. Ms Rigg inquired whether anyone saw what happened. Ms Bradford gave her two names. She further suggested Ms Bradford put her complaint in writing. 30 The same day, Ms Bradford made a formal complaint via email to Ms Rigg. It read: From: Gail Bradford Sent: Friday, 27 February 2004, 3:09 PM To: Geri Rigg Subject: Formal Complaint Hi Geri, Further to our brief conversation, I wish to make a formal complaint against Gordon Meggatt. As you are aware the Regional Managers Conference was held at Ingleside this week. I attended the conference for the dinner on Wednesday evening (25th) and the conference sessions the following day (Thursday 26th). After dinner on the Wednesday evening, a lot of the group went to the Recreation room to play pool, or table tennis, or just chat. I was asked to play pool, partnering with Kevin MacDonald, playing against Darren Cocks and Gordon Meggatt. During the game, as I bent over the table to play a shot, Gordon grabbed me. This was not a playful pat on the butt. Gordon put his hand between my legs and grabbed my crotch. At the time, I did not want to make a scene, so laughed it off, turning to Gordon and asking him whether he had run out of young women to grope. Both Kevin MacDonald and Darren Cocks were at the pool table, however, I'm unsure what, if anything, they saw. Please let me know if you require any further information from me regarding this incident. Regards, Gail 31 In her evidence she described the incident as follows: . . . I felt that person grab me with his/her hand on my genital area for no longer than 1 or 2 seconds. . . . She said she felt "very angry, shocked and humililated". 32 As the memorandum listed two witnesses to the incident, Mr MacDonald and Mr Cocks, Ms Rigg set about interviewing both. She saw Mr MacDonald on Monday 1 March 2004 and recollects he said: I didn't see what actually happened but yes I did see that something happened because as Gail was leaning over the pool cue about to take a pool shot, I saw Gordon walk behind Gail and suddenly she jumped up and spun around suddenly looking very angry. I heard Gail say to Gordon "Have you run out of young women to grope". It was absolutely obvious to me that something between them had happened and it must have been a fairly serious nature for Gail to respond in that way to Gordon. 33 Mr MacDonald was then asked to put his recollection in a statement which he did and sent it by email to Ms Rigg. It reads as follows: From: Kevin MacDonald Sent: Tuesday, 2 March 2004 9:49 AM To: Geri Rigg Subject: Complaint Geri Further to our discussion yesterday, my recollection of the incident on Wednesday the 25th: I was playing pool with Darren Cocks, Gordon Meggatt & Gail Bradford. Gail Bradford was leaning over the pool cue to take her shot. Gordon Meggatt walked around behind her, and I saw her suddenly stand up (before completing her shot), spin around suddenly, looking very angry, and say something to him. I did not hear what she said or Gordon's reply. I did hear final Gail's response to Gordon's reply - "Have you run out of young women to grope". That is all I heard of the matter until our conversation yesterday. Kevin MacDonald 34 Mr MacDonald in his affidavit referred to Ms Bradford's reaction as she looked "very angry in the fact and spun around to look at the applicant". 35 Ms Rigg was unable to interview Mr Cocks until Tuesday 2 March 2004. Ms Rigg recalls she asked whether he was a witness to an incident while playing pool in the games room on the Wednesday evening. She recalls Mr Cocks said: Something obviously happened because I noticed Gordon walking behind Gail as she was leaning over the pool table to take a shot. It looked like he grabbed her bottom while she was playing her shot. I say "looked like" because I couldn't see his hand as Gail and Gordon were at the other end of the pool table to me. But I saw Gail's reaction. She suddenly jumped up with surprise and said something along the lines of "Are you right there Gordon?". I saw Kevin approach the two of them and he made a comment to Gordon - I can't remember exactly - something along the lines of "Gordon, that's not acceptable. Did you just grab Gail's bum?". After that I noticed that whenever Gordon would approach Gail after that she would move closer to me to keep away from him. I also specifically stood in between the two of them at one stage so that he wouldn't get close to her. I also saw Gordon at one stage give Gail a 'cuddle' from behind with his arms draped over her shoulders and around her front. She crossed her arms and lifted his arms off her. 36 Mr Cocks then sent the following statement via email to Human Resources on Tuesday 2 March 2004: From: Darren Cocks Sent: Tuesday, 2 March 2004 6:18 PM To: Geri Rigg Subject: RM and BDM Conference 24th and 25th of Feb 2004. Hi Geri, As discussed I was witness to what I would term (at best) unacceptable behaviour on the night of 24th Feb 2004. Gordon Meggatt, Gail Bradford Kevin McDonald and I were playing pool/snooker. Gail and Kevin on one team against Gordon and I on the other. It was obvious that Gordon was under the influence of alcohol at the time. Some slurred speech after drinking wine at Dinner and Beer subsequently. In what seemed like an attempt to put the opposition off, Gordon walked behind Gail and looked like he grabbed her bottom while she was playing a shot. I say "looked like" because I could not see his hand as Gail and Gordon were opposite me at the other end of the table. Gail certainly jumped up with surprise as if something had happened. I don't doubt that he did. Gail did express dissatisfaction saying something along the lines of 'are you right there, Gordon!'. Gordon was approached by Kevin who made a comment about his actions but I can't recall exactly what was said. Something along the lines of 'Gordon, that's not acceptable, did you just grab Gails bum'?. Gordon was back and forth between our table and others in the room during the game. At times Gail moved closer to me when Gordon was approaching to keep away from him and at one stage I specifically stood between the two of them so that he wouldn't get close to her. Gordon at one stage gave Gail a "cuddle" from behind her with his arms draped over her shoulders and around her front. Gail had crossed her arms and lifted his arms off her. For the record I had had 2 glasses of wine and a couple of soft drinks between 7pm and 11pm when the incident had occurred. That's about all I can recall with regards to the above incidents, at other times when he was wandering the room, I was invariably playing a shot. 37 Mr Cocks in his affidavit referred to her reaction as she jumped "into an upright position looking very startled". 38 On Thursday 4 March 2004, Ms Rigg met with Mr Tony Hoban, the person to whom Mr Meggatt reported. She recalled the following conversation: Ms Rigg: Tony, as you know, I've been conducting an investigation into the complaint by Gail Bradford against Gordon Meggatt. So far I've spoken to Gail, Kevin MacDonald and Darren Cocks. Mr Hoban: And do Kevin and Darren's version of events support Gail's? Ms Rigg: Here is a copy of Gail's complaint, and the witness statements of Kevin [MacDonald] and Darren [Cocks]. On the face of the information so far, their information is pretty consistent. I mean, we still have to speak to Gordon and get his side of the story. But I have to say so far the information seems to indicate on the balance of probabilities that the incident did occur as Gail describes. Mr Hoban: If it is the case that Gordon did this to Gail, it is completely unacceptable. If we find he did do this, what are the sanctions available to us? Ms Rigg: Well, depending on the finding we make in the investigation, as a serious sexual harassment offence we might look at a final warning or perhaps termination of his employment. We need to get some advice from the lawyers on that. I think we need to have some options in mind given if we go up to Port Macquarie to speak to Gordon, we won't be able to get legal advice as easily when we're up there - we should be as prepared as possible. . . . Primarily, we need to take into account the safety of all our employees. Given that Gordon is located in Port Macquarie and cannot be easily supervised remotely is also a consideration. But the next step for us now is to speak to Gordon and get his response to Gail's complaint. Legal advice was then sought by the respondent. 39 On Monday 8 March 2004 at 2.30pm, Mr Hoban and Ms Rigg travelled to Mascot Airport to catch a 4pm flight to Port Macquarie. Mr Hoban had been attempting to telephone the applicant but had been unable to speak to him. While in a taxi, at approximately 3 pm, Mr Hoban received a telephone call, after which Ms Rigg recalls he said to her: That was Gordon. I told him to immediately return to Port Macquarie as you and I are travelling to Port Macquarie this afternoon to meet with him about a serious matter. He said he would meet us at the Port Macquarie office. 40 On arrival in the applicant's office, Ms Rigg conducted an interview with the applicant. Mr Hoban took contemporaneous notes which he transcribed the following day. I find these notes relevant to my consideration when particular facts are challenged. Relevantly of this meeting, the notes transcribed read: Geri Rigg, General Manager, HR, and I arrived at the office at about 5pm. Geri said she would get to the point and explained that a complaint of sexual harassment had been raised against Gordon by Gail Bradford. She said that Gail said that, while they were playing pool at the Westpac College at Ingleside on March 25, 2004, that Gordon had walked up behind her, put his hands between her legs and grabbed her in the crotch. Geri said that two witnesses, Kevin MacDonald and Darren Cocks, had made statements which corroborated Gail's complaint. Gordon said he had no recollection of this incident. He said he had a good relationship with Gail and they often joked about things. He said he would have had no intent or malice. He said if he had done it with intent, he would not have done it in front of a General Manager and a Regional Manager. Geri said perhaps Gordon had had too much to drink on the night in question. Gordon said: "I just don't grope people". He said the group had had some drinks over dinner and afterwards. He said groping was not in his "normal arena" of behaviour. He said his behaviour was not meant with any malice or sexual intent. He said if that was what was perceived, it was incorrectly perceived. He said: "We were talking in a ribald way about sinking balls, but nothing with sexual intent". He said he realised the full gravity of the situation he was in. Gordon said he could only suggest it was alcohol related. He said he had had a lot of pressures in his life in the past year or so. These included a separation from his partner, a sick father, his ex-partner's illness, and some work pressures of his changed role. He said that 7 years ago there was an incident he was involved in, but not similar to the current incident in the organisation. He said anything which had happened on the night in question at Ingleside could have been due to excessive alcohol. He said he had been feeling lately that he had been using alcohol excessively and he now thought that he would like employee counselling. Gordon said that this would terminate his chances in regional NSW for the rest of his life. He said the organisation should have compassion and allow him to have medical assistance to deal with his alcohol intake. He said he believed he had been abusing alcohol in recent times. He said this issue was a catalyst to seriously look at what he was doing with his life. He said there had been cases of public figures, like the leader of the Australian Democrats, who had problems with alcohol and were allowed to deal with it and then return to work. He said he would like Geri and myself to express his "severe apologies" to Gail. He asked that the personal issues he raised be considered by Mark Bethwaite and Kevin MacDonald. Gordon said he hadn't sought assistance of the Employee Assistance Program yet. He said he knew of the program but didn't think he had needed it up until now. Geri advised that the matters he raised needed to be discussed with myself and our advisers. . . . The meeting was then adjourned. 41 When the applicant left his office, Mr Hoban and Ms Rigg had a discussion about the applicant's responses and the options available to the respondent. They made a telephone call to their lawyer to obtain legal advice. On Mr Meggatt's return, Mr Hoban's notes continued as follows: Gordon left the room. About ten minutes later, Gordon re-entered the room. Gordon said he would consider termination of employment to be unjust and unfair. Geri said that, at best, an offer to resign would be the best that could be done. Gordon said that he would expect compassion from ABL in his position. He said he would consider not resigning and would most likely take the matter to court. Geri asked if this wouldn't have the reverse impact of his desire to keep his reputation intact. Gordon asked for time to take his own advice and Geri and I agreed that he should do so. Gordon said he would contact us at 10 am the next morning. Gordon packed up his personal possessions and we allowed him to use the regional manager's car to drop these to his unit and then drive back to the office. He then drove myself and Geri to the hotel where we were staying. On the way to the hotel, Gordon said that it had been a pleasure working with myself and Geri and that it was sad that it was ending this way. When we got to the hotel, Gordon got out of the driver's side and walked around the passenger side. He approached Geri and gave her a kiss on the cheek and then shook my hand. He then left. 42 Given the applicant had asked for an opportunity to continue the discussion the following morning, Ms Rigg and the applicant agreed they would tell any staff who needed to know, as well as Council members and the Regional Presidents, that the applicant was on leave. 43 It is agreed that there was some conversation about the applicant contacting Ms Bradford and I accept he was advised he should not contact any person in the company. A telephone call was also made to the Information Technology Department who was instructed by Ms Rigg to stop the applicant's access to his computer. He was given an opportunity to remove any personal material from it. 44 The next day, Tuesday 9 March 2004 at approximately 10.17am, the applicant called Mr Hoban. He requested Mr Hoban write down what he was about to say. Mr Hoban's notes read as follows: March 9, 2004 At 10:17 am, Gordon Meggatt called me on my mobile phone. He asked me to write down what he was about to say. He said the matter we discussed with him yesterday was a serious matter. He said he had taken legal advice and his response was as follows. He requested a full copy of Australian Business Limited's Sexual Harassment Policy and Procedures. He would like written full details of the incident by Gail and written statements of the witnesses. He wanted these within 24 hours. Then, he wanted time to consider these and discuss with his legal counsel. He said he had had time to reflect on the evening of the incident and he did recall some incidents after the alleged incident. He said we should note that he was concerned at the process to date. He said he was not offered the opportunity to have an independent witness at the meeting the previous day. He said it could be considered that the offer of termination or resignation was constructive dismissal. He said he was concerned that there was a 12 day delay between the incident and the meeting with him. He said at the function, the provision of unlimited alcohol raised concerns of the liability of the employer. He said at the time of the alleged incident, neither Gail or Kevin MacDonald mentioned anything to him, and they had not done so since. He said there was a general party atmosphere on the evening and the majority of people were drinking. He said, knowing Gail, he thought she may have been drinking alcohol on the night. He said afterwards on the evening, with four colleagues, including a CEO, they went to the room of one of the people and continued on, with no incidents occurring there. He said there had been little or no consideration of his own recent circumstances. He said he had increased pressures at work which had mounted in recent time. He said he was concerned that when we parted company the previous day outside the 4 Points Sheraton hotel that Geri had given him a kiss and he said this was inappropriate. He said he was happy to talk to Kevin MacDonald and Mark Bethwaite. He said he believed the options given at the meeting the previous day exceeded the alleged incident. He said he could give us three options. 1. That Gordon take a period of sick leave - say 2 months - and seek Employee Assistance Program assistance during this time. 2. That he would resign if we could give him an appropriate separation package, based on redundancy provisions. He said he would sign a Deed of Releases under this situation. He said there was precedent as this had occurred in the past with Sandra Orvad, where ABL settled with her. He said he had a copy of the terms. He said this was a similar matter to his situation. He said the ABL reputation would be maintained under this option. He said consideration would need to be given to his age - 47 - his need to re-locate and child support if these terms would wash with him. 3. ABL could proceed to terminate. If this was the case, he believed he would have little to lose and would take it to a legal setting. He said he would remain on his mobile for our return call. 45 At about 11.30am, Mr Hoban and Ms Rigg had a conversation with the applicant and then sought legal advice. At 11.30am, Mr Hoban rang the applicant and asked to meet him and his legal adviser at 12.30pm to provide an ABL response to the matters he raised. The applicant rang shortly afterwards to confirm this time and Mr Hoban arranged an apartment (as all meeting rooms were taken) at the Sheraton. 46 At 12.30 pm, Mr Hoban and Ms Rigg met with Mr Gillroy, the applicant's solicitor, but also a Councillor of the respondent's Mid North Regional Council. Mr Gillroy was handed a "without prejudice" offer in written form dated 9 March 2004. The offer was made by ABL in a "without prejudice" letter and was expressed to be open until 10 am Wednesday 10 March 2004. A further conversation then took place and the contemporaneous record of that conversation by Mr Hoban, after the event, is as follows: Gordon asked for the letters of complaint by Gail and the witness statements. Geri said our advise was that these did not have to be supplied. She said the contents of the complaint letter had been relayed to Gordon and he had been advised that the witnesses statement corroborated Gail's complaint. Geri said that the Sexual Harassment Policy would be emailed to Robert Gilroy and she took his business card to get his details. Robert Gilroy asked Geri a number of questions, about the time of the incident (about 11pm, Geri said); the place it occurred (Westpac College at Ingleside in the games room); whether the witnesses saw the specific incident or were generally in the location (Geri said they saw the specific incident or were generally in the location (Geri said they saw the specific incident in that they saw Gordon move behind Gail and then a reaction from her); who the most senior person was at the time (Kevin MacDonald, General Manager of Membership and Marketing). Gordon and Robert asked for a private room to discuss the matter. They went to a bedroom in the apartment and returned after only a few minutes and said goodbye and left without making any further comment. 47 The notes made by Mr Hoban were typed immediately after the meeting. In accordance with the applicant's request, the Human Resources Department emailed to Mr Gillroy a copy of the respondent's harassment policy. 48 It appears throughout 10, 11 and 12 March 2004 there was some legal correspondence between the parties. No agreement was reached. At 3 pm on Friday 12 March 2004, a letter of termination was delivered to the applicant, and is reproduced above at [2]. Applicant's Submissions 49 Mr Patch, on behalf of the applicant, submitted the contract was unfair on its face and in its operation. 50 The applicant contends the contract in its terms failed to provide for a proper investigation in the circumstances and the applicant was not given a fair opportunity to respond to the allegation. As to the terms of the contract Clause 15.2 of the employment contract gave the employer an unfettered discretion to investigate an allegation of misconduct. The contract was unfair in that it was silent on the procedures to be followed in the event that the employer/respondent was contemplating terminating the employment of the applicant (see Abboud v The State of NSW (Department of School Education) (1999) 92 IR 32). The applicant asserts a number of clauses should be inserted in the contract to make it fair. 51 The applicant challenged the procedures followed by the respondent in the conduct of the investigation. The applicant asserted he was not accorded natural justice. As to the failure to provide procedural fairness, the applicant submitted: · he was given no reasonable opportunity to respond to the allegations; · the option given to the applicant to resign on 8 March 2004 was in the circumstances no real option; · even if the contract was fair in its terms, the conduct of the respondent on 8 March 2004 was procedurally unfair, and made the contract unfair; and · he was terminated in circumstances which were unfair as during the investigation, the employer was contemplating termination. 52 The applicant challenged a number of findings of fact and in doing so challenged the credit of some witnesses called by the respondent. The applicant denies the incident occurred and contends the evidence: · given by Mr MacDonald and Mr Cocks did not corroborate there was an altercation between Ms Bradford and Mr Meggatt; · does not establish Ms Bradford's assertion that an incident occurred, given the inconsistency between her evidence and that of Mr MacDonald and Mr Cocks; · casts doubt as to where Mr MacDonald and Mr Cocks were standing when they allegedly saw an incident; · casts doubt as to whether Mr MacDonald and Mr Cocks could have heard any asserted comments by Ms Bradford; · establishes Ms Bradford did not immediately report the incident (such evidence supports the proposition the incident did not occur); · Ms Bradford's explanation as to why she did not report the incident immediately was not to be believed and was denied by others as unlikely; · establishes no other person amongst many noticed or heard the asserted loud angry (and/or emphatic) words of Ms Bradford; · reveals Ms Riggs in her affidavit repeated verbatim words from Mr Cock's email of 2 March 2004 and therefore raises some doubt as to her credit; and · establishes no witness names were provided to the applicant during the interview of 8 March 2004 which was an unfairness of a procedural nature. Respondent's Submissions 53 Mr Goot, AM SC, on behalf of the respondent, submitted the application under s106 raises two issues: · whether the evidence demonstrates a proper basis for the summary dismissal of the applicant's employment; and · whether the contract was unfair as alleged in respect of the investigation and decision making of the respondent in dismissing the applicant for misconduct. The respondent submits relevant clauses of the contract which guide the court are clauses 4, 15 and 21. 54 The respondent asserts the employment contract, in its terms, is not unfair. Relevantly, the contract of employment effectively: · incorporates the employer's policies, including the Equal Opportunity Policy into the contract; · expressly refers to the Equal Opportunity Policy, including that sexual harassment is unlawful; · expressly establishes that a breach of Clause 21 for serious misconduct is a basis for summary termination of employment; and · incorporates as a term in the contract, the employer's Sexual Harassment Policy. 55 Further the respondent submits, the contract which contains terms that enable an employer to conduct an investigation into an allegation of sexual harassment cannot be an unfair contract for the purposes of s106 of the Act. The respondent concludes the Summons is therefore without merit. 56 The respondent asserts the applicant's case is an "unfair dismissal" claim rather than a s106 claim. Alternatively, it is a claim for breach of contract and as such is beyond the jurisdiction of the Court (Sydney Water Corporation Ltd & Anor v Industrial Relations Commission of NSW & Anor (2004) 61 NSWLR 661). 57 The respondent submits that in any conflict between the evidence of the applicant and the respondent's witnesses to the event, the evidence of the latter should be preferred. 58 The respondent in its Amended Reply to Summons for Relief filed 16 April 2007 pleads in particular (l): (i) the Respondent conducted an investigation into the allegations surrounding the Applicant's conduct after receiving a formal complaint by Ms Bradford; (ii) the Respondent obtained statements from witnesses present during the incident regarding the Applicant's conduct; (iii) the Respondent provided the Applicant with an opportunity to respond to the allegations at the 8 March 2004 meeting; (iv) the Respondent carefully considered the Applicant's responses to the allegations given at the 8 March meeting; (v) the Applicant advised the Respondent he wished to consider the matter and speak to his solicitor. Ms Rigg agreed that this was appropriate in the circumstances; (vi) the Applicant obtained legal advice and some negotiations were entered into between the solicitors for each party regarding the Applicant's departure from the Respondent. 59 The respondent contends in the conduct of the investigation there was no denial of procedural fairness. The respondent submits the evidence establishes: · the complaint was made; · witness statements were taken; · there was corroboration by witnesses as to serious misconduct · the applicant was interviewed and did not deny the allegation; · consideration was given to the applicant's explanation and reaction to the allegation; · time was given to the applicant to seek legal advice; · there was authority given to the company officers to terminate after investigation; · further correspondence between the parties was entertained. Therefore the applicant was accorded procedural fairness. The respondent submits the summons should be dismissed. Relevant principles: Misconduct 60 The test for misconduct has long been established and was enunciated by Cook J In re Dispute - Dismissal of Union Delegates at Homebush Abattoir [1966] AR (NSW) 371 at (374): . . .the question of whether the conduct of an employee amounts to misconduct justifying instant dismissal would generally depend upon whether or not the act complained of can properly be regarded as deliberate or wilful or of such a nature as to strike at an essential element in the contract of service, namely, obedience to the lawful commands of the employer and the right of the employer to enforce discipline. . . . As adopted by Schmidt J in Simon Richard Lane v The Commonwealth Bank of Australia [2000] NSWIRComm 274 at [173]. 61 In the application of this principle, Hungerford J, in a consideration as to a summary dismissal in Pastrycooks Employees, Biscuit Makers Employees & Flour and Sugar Goods Workers Union (NSW) v Gartrell White (No 3) (1990) 35 IR 70 held (at 78) that conduct: . . . where the employee concerned has wilfully failed to obey the lawful and reasonable orders of the employer in such a way as to amount to an intention by the employee no longer to be bound by an essential condition of the contract of employment ... and (at 84): The right of an employer to summarily dismiss an employee without notice is qualified by the employee inter alia having committed an act of misconduct; thus, to be able to rely upon the right, and to pay the employee up to the time of dismissal only rather than terminate by notice or payment in lieu of notice, the employer must not only allege misconduct but must also prove it. 62 In Concut Pty Ltd v Worrell (2000) 103 IR 160, Kirby J outlined the ambit of considerations giving five legal propositions surrounding an allegion of misconduct, saying at [51]: 1. . . . 2. . . . 3. . . . 4. It is, however, only in exceptional circumstances that an ordinary employer is entitled at common law to dismiss an employee summarily ( Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66 at 72-73). Whatever the position may be in relation to isolated acts of negligence, incompetence or unsuitability, ( Printing Industry Employees Union of Australia v Jackson & O'Sullivan Pty Ltd (1957) 1 FLR 175) it cannot be disputed (statute or express contractual provision aside) that acts of dishonesty or similar conduct destructive of the mutual trust between the employer and employee, once discovered, ordinarily fall within the class of conduct which, without more, authorises summary dismissal. Exceptions to this general position may exist for trivial breaches of the express or implied terms of the contract of employment ( Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66 at 82). Other exceptions may arise where the breaches are ancient in time and where they may have been waived in the past, although known to the employer (See Boston Deep Sea Fishing and Ice Co v Ansell (1888) 39 Ch D 339 at 364). Some breaches may be judged irrelevant to the duties of the particular employee and an ongoing relationship with the employer. . . . But these exceptional cases apart, the establishment of important, relevant instances of misconduct, such as dishonesty on the part of an employee . . . will normally afford legal justification for summary dismissal. Such a case will be classified as amounting to a relevant repudiation or renunciation by the employee of the employment contract, thus warranting summary dismissal. 5. . . . In Ian Ueckert and Australian Water Technologies Pty Ltd [2000] NSWIRComm 123, Sams DP commented on a dismissal for harassment in the workplace: 265 It is trite for the Commission to observe that there is absolutely no place, or reason for, the harassment of one employee by another employee, be it sexual or otherwise, in, or outside the workplace. Indeed, such behaviour is unlawful. Where proven, it will, in my view, be a sound basis for disciplinary action and, if the behaviour continues, or is of a serious nature, it may constitute grounds for summary dismissal. 266 I have no doubt that, if the employer's particular allegations are proven, the applicant would have little cause for complaint. The employer would have had no choice but to dismiss him. Indeed, it would have been obliged to do so, in order to protect its other employees. 63 It is therefore clearly established on the authorities that misconduct by an employee, if sufficiently serious, can strike at the heart of the employment relationship be it a common law or contractural relationship and justifies a decision by the employer to summarily dismiss the employee. Such behaviour can be a breach of the employment contract's requirement for mutual trust and confidence (Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66, Dixon and McTiernan JJ (at 81) and (at 82)). 64 Sexual harrassment by one employee against another has been held to be serious misconduct. Misconduct can warrant summary termination if such misconduct affects working relationships and/or the trust required between employer and employee. Conduct outside the workplace can also warrant termination if it adversly affects working relationships (McManus v Scott-Charlton (1996) 70 FCR 16). Unfairness in a contract 65 While these general principles are applicable to a finding of misconduct, there are also a number of authorities guiding the court in its consideration as to whether a contract is unfair in its terms and application such as to attract relief under s106. Claims under s106 asserting an unfairness related to conduct have been given recent consideration. 66 In Sydney Water Corporation and Anor v Industrial Relations Commission of NSW & Anor [2004] 61 NSWLR 661, the New South Wales Court of Appeal, when considering the jurisdiction of the Court in an application under s106 of the Act challenging a termination of an employee under a contract of employment determined at [25]: Section 106(2) states in the plainest terms that a contract may become unfair, so as to attract the jurisdiction of the Commission, because of post-contract conduct of the parties. But it is the "contract" that is to be held unfair, and not the conduct, in the final analysis. Unfairness may of course stem from what the contract fails to provide, for example as regards termination procedures. Therefore unfair conduct in breach of a contract of employment does not render a fair contract unfair so as to be amenable to relief under s106 of the Industrial Relations Act 1996. It is the contract itself which must be demonstrated to be or to have become unfair ( Sydney Water ). 67 In the Appeal (remitted from the Court of Appeal to the Full Bench of the Commission) in Truelove v Sydney Water Corporation Limited and anor [2005] 46 IR 253, the Full Bench reiterated this principle stating at [41]: . . . applicants . . . should not overlook the consideration that s 106 is directed to the fairness, etc., of contracts and arrangements and with the fairness, etc., of their terms, and that the primary focus should be the contract or arrangement and its respective terms or omitted terms as to the effect thereon of the impugned contract. Therefore a demonstrable unfairness in an employment contract requires the terms of the contract be found unfair, and/or how conduct effects a term (or omitted term) of the contract such as to make the contract unfair. Consideration 68 A number of issues raised in the Summons for Relief require the application of these principles. Issues to be addressed are: whether the allegation against the applicant has substance; whether the applicant was given a fair hearing and whether the decision reached by the employer was unfair in the circumstances, such as to make the contract unfair. The evidence 69 The first issue is whether the respondent fairly determined the asserted incident occurred. That issue requires a consideration of challenges mounted by the applicant against the evidence given by Ms Bradford, Mr Cocks, Mr MacDonald and Ms Rigg and a determination as to whether such challenges have substance. 70 When the alleged 'groping' of Ms Bradford occurred, Mr MacDonald and Mr Cocks were playing pool with the applicant and Ms Bradford in the games room on 25 February 2004 after the ABL conference dinner. The respondent dismissed the applicant for this act determining it an act of "sexual harassment" and deeming it to be "serious misconduct". The applicant conceded, if proven, the act could be termed "serious misconduct". 71 Of significance is the evidence of the applicant and his denial that he "groped" Ms Bradford. The denial by the applicant in evidence, is challenged because, on 8 March 2004, when the allegations were first put to the applicant by Ms Rigg, Human Resources Manager (with Mr Hoban present and taking contemporaneous notes), the respondent asserts the applicant did not deny the allegation outright. 72 The applicant replies to this assertion saying he made a "mistake at the time" of the interview in not clearly denying the allegation put to him. Counsel on behalf of the applicant asserts: The applicant's immediate reaction, when suddenly confronted with the allegation on 8 March 2004, without any prior warning, was one of confusion and shock. The fact that he searched for an explanation, rather than giving an outright denial, was natural and understandable. Therefore . . . the Court should not make the same error as that made by the respondent, and convert the failure to explicitly deny the allegation in such circumstances to, in effect, an admission. 73 The contemporaneous notes taken by Mr Hoban at that initial meeting with the applicant are equivocal as to the submission mounted by the respondent that the applicant did not categorically deny the incident. There is evidence as to the reaction of the applicant which could support the respondent's proposition or an alternative proposition favourable to the applicant. Mr Hoban's notes reveal the applicant said "he had no recollection of this incident" and "I don't just grope people" and groping was not his "normal arena" of behaviour. However, the applicant then went on say there was ribald talk while the pool game was being played, and he believed he had been drinking too much alcohol in those times. At the interview he also asked for an apology to be conveyed to Ms Bradford and sought employer assistance for his personal problems. I accept the applicant's submission that his reaction when the allegation was put to him was one of "confusion and shock". 74 I do not necessarily accept either the proposition the applicant did not deny the allegation outright, or the proposition that the applicant was mistaken in not doing so. However, the court will consider the other evidence rather than the immediate reaction of the applicant to determine if there was an unfairness in the employment contract through the respondent's determination to dismiss the applicant for serious misconduct. Evidence of witnesses is relevant to this consideration, which involves an examination of the evidence and findings of fact. 75 The applicant asserts the inconsistencies between the evidence of Ms Bradford and that of Mr MacDonald and Mr Cocks are such that the court would not be persuaded the incident occurred. Such inconsistencies, the applicant asserts, include the recollections of Mr MacDonald and Mr Cocks at the time of the asserted act as to where each were standing around the pool table and what they could have seen and heard; what were the exact words used by Ms Bradford and heard by Mr MacDonald and Mr Cocks; what was then said by Mr MacDonald to Ms Bradford; what were the immediate reactions of both the applicant and Ms Bradford and any later reactions. 76 I accept at the particular time the applicant, as part of the pool game, was moving behind Ms Bradford at a time when she was leaning her body over the pool table to take a shot. I have carefully given consideration to the variation between Mr MacDonald's recollection of the movement of the applicant and Mr Cock's recollection. I am satisfied given the recollection of Mr Cocks, Mr MacDonald and the evidence of Ms Bradford that the applicant moved behind Ms Bradford at a particular stage in the game when Ms Bradford was leaning over the pool table to take a shot. The applicant asserts the positions of Mr Cock and Mr MacDonald at the pool table at the time of the asserted incident would not satisfy the court as to the applicant positioning himself behind Ms Bradford. However, from the totality of the evidence regarding movement around the table, I am satisfied the applicant did in fact move behind Ms Bradford at a time when she was bent over to take a shot in the pool game. 77 In cross examination while Mr Cocks suggested he could not recall exactly what he heard, neither he nor Mr MacDonald resiled from their descriptions of her reaction. 78 The description of Ms Bradford's reaction when the applicant went behind her was that she jumped "into an upright position very quickly looking startled" (Mr Cocks) and "she jumped up and spun around suddenly looking very angry" (Mr MacDonald). I am satisfied that after the applicant moved behind Ms Bradford, she reacted immediately and expressed concern. 79 I take into account also the words Ms Bradford used in reaction to the asserted act of the applicant. The applicant submits the variations are such that the court would not be persuaded Ms Bradford used the following words: Gordon have you run out of young women to grope. Further, the applicant submits, if such words were used they are not persuasive evidence the incident occurred. Mr Cocks recollected Ms Bradford suddenly, while taking a shot jumped up with surprise and said something along the lines "are you right there Gordon?" However Mr Cocks agreed he had no absolute recollection of the exact words Ms Bradford used. Mr MacDonald's recollection was Ms Bradford suddenly stood up, spun around look very angry and he heard her say: You've obviously run out of young women to grope. 80 Mr MacDonald's significant recollection satisfies me there was, by Ms Bradford, an immediate reaction to an incident which occurred between herself and the applicant and she took offence as to what had occurred. She particularised a direct complaint to the applicant in words both in tone - loud and angry - and she used the word "grope" immediately after the incident. Mr Cocks' recollection has the effect of endorsing there was an incident and an immediate angry response by Ms Bradford. Mr Cocks' recollections only persuade that he was aware of some incident involving the applicant and Ms Bradford and she appeared immediately distressed. I do not take into account Mr Cocks' assertion the applicant made further other offensive actions involving the Ms Bradford. However, the dismissal of that recollection of Mr Cocks does not lead to a dismissal of his evidence that there was a movement of the applicant behind Ms Bradford and he was aware of her immediate reaction. 81 The applicant in reply attacked the credit of Mr MacDonald asserting that at a ABL Special Meeting of the Mid North Coast Regional Council on 22 March 2004, after the termination, Mr MacDonald told assembled councillors he did not know the reason for the termination. It is asserted by Mr Newman, a former representative on the Mid North Coast Regional Council, who attended the 22 March 2004 Special Meeting that Mr MacDonald said: I was in attendance at the function after the dinner but I did not witness the incident. This was Mr Newman's recollection but it was not supported by the recollection of other councillors. I do not find Mr Newman's evidence, which is denied by Mr MacDonald, in any way discredits Mr MacDonald's recall of events which have led to the allegations of misconduct. I accept Mr MacDonald as a truthful witness. 82 The applicant challenges the recollections of Ms Bradford and Mr MacDonald as to a conversation they asserted occurred on the balcony near the games room the morning following the alleged incident. I accept this conversation occurred and as a result Ms Bradford lodged an official formal complaint against the applicant. Mr Cocks and Mr MacDonald, both senior managers, did not immediately report the asserted grope as a serious incident and did not do so until requested by the Human Resources Branch. I accept they perceived the incident as a matter for Ms Bradford. When asked by Ms Bradford, Mr MacDonald responded with sound and sensible advice to her including advising her to formally lodge a complaint. Mr MacDonald's failure to record the conversation he had with Ms Bradford on the balcony the morning following the incident either immediately, or on the initial statement given to Ms Rigg, while part of the history, I do not accept is persuasive evidence the incident did not occur. Mr MacDonald encouraged Ms Bradford, following his early morning conversation with her to follow official channels and report the incident. It was what was required of him as her superior. Perhaps more could have been put in his initial written report and the morning conversation could have been particularised, but the fact that it was not particularised does not lead me to conclude the conversation did not occur, or that the failure to report the conversation in his initial report of the incident casts doubt on Mr MacDonald as a witness. 83 Ms Bradford asserts she did not complain to any person on the night other than through her initial reactive outburst to the applicant because, she asserted, "she might cause a fight". The applicant asserts this excuse, offered by Ms Bradford for not reporting the incident, was an untruth and casts doubt on her credibility. The respondent's witnesses found her belief improbable. I found it hard to accept Ms Bradford's explanation which was offered to counsel in cross examination. I accept there was drink consumed at the conference dinner and afterwards. I accept there was ribald conversation around the pool table probably in an unacceptable tone and fuelled by the relaxing effect of alcohol on the participants. However, there is nothing to suggest the tone of the evening sank to the level of aggressive violence sufficient to encourage a fight. While the explanation given by Ms Bradford, that making a complaint could lead to a fight, is not supported by the evidence, it is not so unacceptable as to diminish her evidence in general. I do not accept that in rejecting her explanation that rejection should be a foundation for concluding Ms Bradford lied on oath such as to conclude all her evidence is called into doubt. 84 I find Ms Bradford a witness of truth. I accept her evidence and, where it varied from the recollection of the applicant, prefer her evidence. I am satisfied that contemporaneous to the event, Mr MacDonald noted her words and her negative reaction, and Mr Cocks noted her negative reaction and later discomfort. 85 The applicant asserts that, as no person in the games room other than Mr Cocks and Mr MacDonald heard Ms Bradford say anything loudly or angrily to the applicant immediately after the asserted incident, the court should therefore not be satisfied she said the words asserted or that she demonstrated anger. It is agreed there was some ribbing and encouragement from on-lookers around the pool table, however, not everyone in the large games room was concentrating on the pool game. The applicant asserts that others in the room "would have heard or noticed something" and given there was no evidence that others had heard anything, the court would have a doubt as to whether "the incident of the reactive, loud conversation" following the asserted grope, could have occurred. 86 Many of the employees and guests in the games room that evening gave evidence. They impressed as truthful witnesses who attempted to recollect events (now somewhat later) on the relevant evening without expressing any particular view of the litigation. Some were no longer in the employ of the respondent. I accept these participants in the evening's activities were clearly occupied in other conversations and other matters of interest after the dinner. I do not accept the failure to overhear Ms Bradford's comment to the applicant can be used as evidence to negate that of Ms Bradford, Mr MacDonald and to its limited value, Mr Cocks. 87 An attack is also made by the applicant on Ms Rigg's credit, given she verbatim recited the content of a conversation with Mr Hoban in terms identical to that received in an email from Mr Hoban. I accept such a mirror recitation can only lead to the conclusion that she copied the email but that does not establish she lied on oath. Neither does it give foundation for a conclusion that her evidence should be dismissed even in a circumstance where she denied the copying. I accept Ms Rigg was a generally truthful witness. I therefore accept as truthful her recollection of the procedures followed in the investigation and the summary contents of the interview she later conducted with the applicant. I find that Mr Hoban's contemporaneous notes of the interview endorse her recollection. I do not accept her denial casts doubt on the fairness of the procedures followed nor brings into question the fairness of the decision making process in which Ms Rigg played a part led to termination of the applicant's contract. 88 As to Ms Bradford's reaction to the event, I prefer the evidence of Mr MacDonald and, in limited capacity, find it supported by Mr Cocks. The fact that there was a reiteration of the event by Ms Bradford the next morning I find persuasive. 89 The evidence relied upon to establish the "groping" occurred is that: the applicant was seen moving behind Ms Bradford; she reacted immediately; her reaction led to words which were loud and angry and directed at the applicant; she was overheard using the word "grope"; the following day she formerly reported the act in terms of a complaint as to the applicant's inappropriate behaviour. All this evidence was before the respondent when it made the determination the events on the evening in question could be termed "serious misconduct" on the part of the applicant. The only new evidence placed before the court which was not available to the respondent at the time of its investigation is the conversation with Mr MacDonald the day following the alleged incident. That conversation reiterates Ms Bradford was offended by the asserted act. Other Misconduct 90 Although unknown at the time of the termination of the applicant's employment, the applicant's behaviour at the Ingleside Conference dinner was not limited to offensive behaviour towards Ms Bradford. His behaviour included conversations and acts with other female employees of the respondent who found the type of attention paid to them by the applicant unwelcome and offensive. The respondent submits this evidence is relevant to the court's consideration. In Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359, Starke J held (at 373): The fact that the appellant's misconduct was unknown to the respondent at the time of the termination of the agreement is quite immaterial. If there was, in fact, any circumstances in existence at the time of the termination of the agreement which could have justified the respondent in so terminating it, then it may justify the termination by subsequent proof of those circumstances ( Smith's Law of Master and Servant, 5th ed., p 107; Taylor v Oakes Roncoroni & Co. (1922 ) 27 Com. Cas. 261, at p 266; Swale v Ipswic Tannery Ltd (1906) 11 Com. Cas. 88, at p 98). And in Sunbird Plaza Proprietary Limited v Maloney and Another (1988) 166 CLR 245, Mason CJ adopted this view saying (at 262): Shepherd v. Felt & Textiles of Australia Ltd (1931) 45 CLR 359 stands as authority for the general proposition that a termination of a contract may be justified by reference to any ground that was valid at the time of termination, even though it was not relied on at the time and even though the ground actually relied on is found to be without substance. . . . 91 In an unfair dismissal case, Bankstown City Council v Paris (1999) 100 IR 363 (at 370) the Full Bench commented: . . . This Commission and its predecessors have never accepted the proposition that an employer dismissing an employee is confined necessarily to the reasons advanced to the employee at the time of dismissal. If relevant circumstances existed at the time of dismissal of which the employer was not aware but which would either themselves or in concert with the reasons advanced, support dismissal, they may be relied upon. Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 467; 61 IR 32 at 73-74 is a relatively recent recognition by the High Court of a parallel approach which has been extant in the common law for a much longer period. For example, in Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359 at 373) Starke J said . . . 92 Also relevant is Concut v Worrell (2000) 103 IR 160 at [29] where Gleeson CJ, Gaudron and Gummow JJ expressly relied upon the "general rule" enunciated in earlier contract dispute cases such as Shepherd to find an applicant's employment contract had been justifiably terminated based upon misconduct unknown to the employer at the time of termination. 93 The respondent relies upon evidence of other alleged misconduct by the applicant the evening of the ABL conference dinner. Three relevant witnesses were called. 94 Ms Zafir, ABL Executive Assistant to General Manager Operations, recollected the applicant made a serious sexual proposition to her that evening. She asserts he said to her: You know Susanne, you're a very attractive lady. There's no-one in my room, do you want to come back to my room with me? And on a separate occasion she had the following conversation with the applicant: Mr Meggatt: Come to my room. Ms Zafir: You must be joking. No way. 95 Ms Doherty, ABL Regional Manager, Central Coast & Sydney Metro, gave evidence of the applicant's inappropriate behaviour to her on the evening. Ms Doherty remembers the applicant attempted to put his arms around her and recollects the following conversation: Ms Doherty: Gordon, don't. Don't start this with me, you're messing with the wrong person. Mr Meggatt: Oooooh! Sorry! I forgot, can't go near you. Ms Doherty also gave evidence that she noticed Ms Zafir would keep moving away from Mr Meggatt. She asserts she overheard him say to Ms Zafir: I've got nobody in my room. Why don't you come with me? You know, you're a really good looking woman. I am ready willing and able at any time. 96 Ms Millar, former Relationship Manager of Illawarra Business Chamber, met the applicant for the first time at the dinner. While sitting in the games room she found herself engaged in an inappropriate conversation with the applicant which left her "completely shocked and appalled" so she walked away. She asserts he said to her: Mr Meggatt: So, who are you going to fuck tonight. Ms Millar: No one. Mr Meggatt: C'mon, don't be like that with me. That's what everyone does. Ms Millar: It's not what I do. No. Go away. 97 I accept the evidence of Ms Zafir, Ms Millar and Ms Doherty. Their experiences on the evening of 25 February 2004 came to light when the respondent was preparing to meet the applicant's case. Their evidence satisfies me the applicant's behaviour on the evening was unacceptable and the tone of those conversations give substance the applicant's admission that he was drunk on the evening. Lack of Procedural Fairness 98 Notwithstanding the asserted facts, the applicant contends the contract was unfair in its operation because it permitted a situation where the respondent denied the applicant procedural fairness in the conduct of the investigation into the allegation made by Ms Bradford. 99 Clause 15.1 of the contract allows for termination of employment for serious misconduct. Clause 15.2 gives the employer a discretion to conduct an investigation and, by inference, to determine the procedures to be followed in that investigation. To submit the contractual clause 15.1 was unfair, the applicant relies on the view expressed in Abboud v The State of NSW (Department of School Education) (1999) 92 IR 32, where the Full Bench reasoned (at 51): If the contract permits the respondent to terminate the contract in a manner which is unfair, that contract may be unfair . . . 100 The applicant asserts clause 15 is unfair to the applicant as it allows the respondent only a "discretion" to investigate an allegation of misconduct. The applicant asserts clause 15 is unfair because it gives the respondent an unfettered arbitral discretion. However the respondent, in the use of its discretion, did conduct an investigation. It is difficult to accept the respondent's enactment of its discretion in determining to conduct an investigation could give substance to the allegation the term of the contract is thereby unfair. 101 The parties to the employment contract agreed to a clause allowing discretion to be held by the respondent. The respondent used that discretion in the applicant's interest to conduct an investigation. The parties entered into the contract on fair and equal terms. The discretionary clause is not, on its face, unfair, simply because it gives the respondent a discretion to investigate. 102 Further, the terms of the contract must be examined in the context of all the obligations under the contract. Clause 21 also obliges the employee to adhere to the employer's equal employment policies and recognises "unwelcome sexual advances" may lead to termination. The employer's sexual harassment policy specifically says the employer will investigate any such allegation. It may have been a breach of the contract, on a reading of the relevant clauses, if the respondent had not conducted an investigation. I find no unfairness in the contract in the circumstances where the respondent used its discretion according to clause 15.2 and conducted an investigation. 103 A further issue is the assertion the respondent failed to allow the applicant an opportunity to respond to the allegation of misconduct within the procedures it adopted to investigate the allegation of misconduct. Such a failure could challenge the fairness of the employer's conclusion that there was misconduct warranting termination. The applicant applies for the insertion of a clause into the contract defining the procedures to be followed in the investigation. Deane J addressed this issue in Hawkins v Clayton & Ors (1987-1988) 164 CLR 539 (at 573): . . . The most that can be said consistently with the need for some degree of flexibility is that, in a case where it is apparent that the parties have not attempted to spell out the full terms of their contract, a court should imply a term by reference to the imputed intention of the parties if, but only if, it can be seen that the implication of the particular term is necessary for the reasonable or effective operation of a contract to that nature in the circumstances of the case. . . . In Simon Richard Lane v The Commonwealth Bank of Australia [2000] NSWIRComm 274, Schmidt J considered a similar submission to that mounted by the applicant regarding the procedures followed in an investigation and expressed the view there was no authority at [171]: . . . for the proposition that unfair investigation procedures, of themselves, will lead to the conclusion that dismissal was unfair or that the contract was unfair, with relief being granted on that basis alone. . . a failure to follow fair procedures may deny an employee the opportunity to advance an innocent explanation for the conduct called into question, or some other reason upon which the proper conclusion that dismissal for misconduct would not be warranted could rest. Whether such an explanation or reason exists, must therefore be considered. 104 The applicant further asserted a contract in its terms which is silent as to the procedures to be followed in an investigation is unfair. Reliance was again placed by the applicant on the decision of the Full Bench of the Industrial Relations Commission in Abboud. However, Abboud is not authority for the proposition that a failure to follow fair procedure renders a contract unfair. In Abboud, the Full Bench (when adopting the High Court in Byrne v Australian Airlines Ltd (1995) 185 CLR 410) said at [51]: The absence of an opportunity being afforded to explain the conduct alleged (particularly where an innocent explanation is available) is a significant factor when assessing whether the contract or arrangement is rendered unfair as a result of the conduct of a respondent. This was not done in this case. 105 Abboud endorses the view that a defined procedure for an investigation, be it defined by a term of the contract or enunciated through the employer's policy, should be followed in an investigation as a matter of fairness. In the circumstances before me, where there was no defined investigative procedure enunciated either in the contract or in the company policy, the question arises what procedure was followed and whether that procedure gave the applicant an opportunity to advance an innocent explanation for the conduct called into question. If such an opportunity was not afforded the applicant, it could provide the ground for an unfair decision being taken by the respondent such as to make the contract unfair. 106 The respondent invites the court to adopt an alternative view that, on the basis of the seriousness of the misconduct established to its satisfaction, any lack of procedural fairness in the investigation was insufficient to render the contract unfair. There is authority for the view advanced that misconduct can outweigh any perceived procedural unfairness (Wang v Crestell Industries Pty Ltd (1997) 73 IR 454 at 467). 107 I am satisfied the evidence establishes the respondent conducted an investigation into the allegation of misconduct in the following manner: statements were taken from the complainant and from the two witnesses; the allegations were put to the applicant in terms, including the fact there were witnesses; the applicant responded; advice was obtained; the applicant was informed that he was to be terminated, but that if he so chose, he could resign; the applicant sought time to obtain legal advice; staff were told the applicant was on leave for a week; correspondence was entered into with the applicant's solicitor before the termination of the applicant's employment; consideration was given to the applicant's alternative propositions as to the way to handle the complaint; and by letter dated 12 March 2004, the applicant was informed of his termination. 108 Further, the applicant asserted he was not given in the interview the names of the witnesses to the asserted act of misconduct and that constituted an unfairness in the investigation procedures of the respondent. Yet in Mr Hoban's notes of the original interview mention was made of "Kevin and Darren" who "provided information which corroborates Gail's complaint". Mr Hoban's contemporaneous notes endorse the view that names of witnesses were mentioned. The applicant accepted Mr Hoban's evidence as to "the general conduct of the conversation". The applicant contends he was taken aback by the comments of Ms Rigg and the allegations raised saying he had no specific or clear recollection of the incident, and gave the following evidence: It was described to me in vague terms. When the allegations were made and particularly given that an allegation corroboration had occurred in relation to the incident I was confused and confounded…I concede however that because of the allegations of the corroboration I self doubted myself…I concede that I would not have rejected the allegations of corroboration particularly given that two (2) of those involved were persons that I considered to be senior members of ABL staff and persons that I: a. report to; b. admire and respect. 109 I accept a reference to "Kevin" and "Darren" could only, in the circumstances, have been a reference to Mr Kevin MacDonald and Mr Darren Cocks. Further, in solicitor's correspondence before the Summons was filed and before final payments to the applicant were made, there is reference to "statements of McDonald (sic) and Cox (sic) purportedly held by ABL". Neither Ms Rigg nor Mr Hoban in their respective versions of the later discussions (after the initial interview) on 8 March and 9 March 2004 made further reference to the identity of Kevin MacDonald or Darren Cocks as witnesses to the incident. I am however persuaded the applicant was told the identity of the witnesses who had provided corroboration of Ms Bradford's complaint at the initial interview. In so finding, the court is not persuaded, even if the names were not provided to the applicant, that would be a relevant unfairness in the conduct of the respondent's investigation. I find no unfairness in relation to the respondent's conduct in this aspect of the investigation. 110 Further, the applicant asserted the interview conducted with him was a sham and Ms Riggs and Mr Hoban went to Port Macquarie to terminate his employment. He contends there was no consideration given to his request for counselling and to be given assistance and another chance, given his personal situation. It is asserted this reveals an inherent unfairness in the conduct of the investigation. 111 After the applicant had given his response to the allegation as communicated by Ms Rigg, she said: Well Gordon, I've heard what you've had to say about your personal circumstances and we'll take that into account. But from where I am sitting I have a very serious sexual harassment complaint, witnesses who substantiate the complaint, your response at best is that you don't recall the incident or that if you did do it, you must have been drunk. Being drunk does not excuse or mitigate the offence. We also have to take into account the fact that you are up here in Port Macquarie without day-to-day personal supervision like other employees in North Sydney, which can leave ABL exposed. We need to be able to trust our employees in these remote offices to behave professionally at all times and do the right thing. Given all of that and because the conduct is of such a serious nature I can't see that we have much option other than to terminate your employment. She recalls the applicant then responded: I think termination is a very harsh decision. You should just give me a warning and you should take into account what I've just told you about my personal stress and the effect alcohol had on me on the night. . . . Ms Rigg then said: . . . We'll consider whether there are any options to dismissal. I'd like to have a chat now with Tony about the options and check in with North Sydney. Could you leave us for a few minutes? The interview then adjourned. After discussion with Mr Hoban and a telephone call to Australian Business Lawyers, the applicant rejoined Ms Rigg and Mr Hoban. Ms Rigg said: . . . the most we can do for you is to give you the option to resign. 112 Mr Hoban's evidence was that in the initial discussion after the allegation was put and the applicant responded, Ms Rigg said: Based on what you've told us Gordon and based on our advice from the lawyers, I don't see that we've got much option but to terminate your employment. 113 Mr Hoban revealed that Mr Bethwaite, then Chief Executive Officer of ABL, had given Ms Rigg and Mr Hoban authority to investigate the allegation and take whatever course of action was required. Both Ms Rigg and Mr Hoban agreed before the interview they had canvassed a number of scenarios and what options would be available to the respondent following consideration of the applicant's responses to the allegation. After hearing the applicant's response, they considered the respondent's decision. 114 In the circumstances, I do not accept the respondent, in discussing possible scenarios and action before the interview, was acting unfairly. I do not accept the evidence establishes the respondent determined to terminate the applicant before the interview had occurred. The applicant was paid up to 12 March 2004 and was paid all his accumulated benefits. Evidence reveals after the initial interview the applicant was stood down on paid sick leave. There was then further conversation the next day with the applicant, and then correspondence, on behalf of the applicant, through his solicitor with the respondent. Whatever occurred in that correspondence, the termination letter of 12 March 2004 makes it clear there was consideration given to the applicant's requests. There was no obligation on the respondent to accept the alternative propositions offered by the applicant but in fairness, those propositions were given consideration. 115 There was no unfairness by the respondent in not allowing the applicant to continue his employment subject to his attending appropriate counselling. The applicant had already been counselled and given a final warning and had undergone special training in relation to sexual harassment matters on a number of occasions prior to the incident. The applicant should have known, given the written warning, the "chat" with Mr Hoban and following workplace harassment courses he had attended, the possible ramifications of his action. Given an examination of all that occurred during and after the initial interview held with the applicant, I am satisfied the respondent had not pre-judged the applicant before he was given an opportunity to respond to the allegations. Conclusion: as to procedural fairness 116 I find the employment contract, which gave investigatory powers within the discretion of the respondent for consideration of any allegation of serious misconduct was not unfair in the circumstance where the discretion was used to conduct such an investigation. Although the respondent had a discretion as to whether to conduct an investigation into suspected breach, the respondent did conduct an investigation. 117 I find the rules of procedural fairness were respected by the respondent in the conduct of the investigation. The applicant was not at any material time in a position of unequal or inferior bargaining power regarding the respondent in the investigation. He had access to a solicitor during the termination process. I find the absence of a clause in the contract reciting the procedures which would be followed for an investigation does not establish an unfairness in circumstances where fair procedures were followed, and those procedures afforded the applicant a right to respond to the allegations. 118 The applicant had an opportunity to provide an innocent explanation but the explanation "if I did it, I must have been drunk and have personal problems" was not accepted by the respondent. They were under no obligation to accept that explanation and it was not unfair to reject it after consideration. Due consideration was given by the respondent to the applicant's personal circumstances. There was an offer from the respondent that the applicant resign rather than be terminated. It is asserted this also was an unfairness and in effect a "constructive dismissal". However, it was dismissed by the applicant. Payments were made to the applicant during a period of negotiation and consideration. In these respects the behaviour of the respondent does not lead to a finding the contract in its terms was unfair due to the respondent's conduct of the investigation. Within the ambit of the contractual terms the applicant was given an opportunity to be heard which opportunity failed to establish an acceptable explanation for his serious misconduct. 119 As to the evidence of the applicant's other conduct on the evening of the conference dinner which has been found to be unacceptable, such behaviour toward Ms Zafir, Ms Millar and Ms Doherty cannot be proof the asserted incident involving Ms Bradford occurred. Nor is it evidence which, standing alone, would necessarily warrant termination of employment. However, the evidence of Ms Zafir and Ms Doherty, both of whom were employees of the respondent, and Ms Millar, a client of the respondent, suggests behavioural problems that would affect working relationships and which could undermine the necessary trust needed between a senior manager and his employer. The conduct objected to by Ms Millar, a client of the respondent, was such as to cause damage to the employer's interests (see Rose v Telstra Corporation Limited, Print Q9292, 4 December 1998. Ross VP, while considering a statutory interpretation canvassed general principles applicable to allegations of sexual harassment; Applicant v Respondent, Print R1221, 1 February 1999, MacBean SDP, Duncan DP and Deegan C). The evidence supports, at the least, the proposition the applicant's behaviour on the night in question lacked the restraint required from a senior manager at a company social event. It could be held the other behaviour was generally offensive and had the tone of sexual harassment. 120 I do not accept the applicant can rely on the allegation that the respondent had encouraged and condoned the drinking of alcohol at company functions and in that way his judgement and actions on the evening in question were affected. While there may have been alcohol consumed on the evening of the ABL dinner that may have effected the applicant's judgement, it has not been established on the evidence that the supply of such alcohol by the respondent could be held to be responsible for that failure of judgement. Conclusion on the evidence 121 Given the applicant had fair opportunity to respond to the allegations against him and his responses were given consideration by the respondent, the remaining consideration is whether the employer's conclusion from its fair investigation that the applicant had committed an act of "serious misconduct" was such as to warrant the termination of his employment contract. 122 The applicant denied he groped Ms Bradford. 123 Where an employer relies upon an act of serious misconduct by an employee as foundation for the termination a contract of employment, the evidentiary legal burden to prove the fact of the employee's misconduct falls to the employer (Pastrycooks Employees, Biscuit Makers Employees & Flour and Sugar Goods Workers Union (NSW) v Gartrell White (No 3) (1990) 35 IR 70 at 83). 124 In Briginshaw v Briginshaw (1938) 60 CLR 336 (as adopted by Full Bench of the Commission in New South Wales Nurses' Association on behalf of Debbie Rudder v Booroongen Djugun Aboriginal Corporation [2007] NSWIRComm 89) at [42]), Dixon J said (at 362): . . . The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters "reasonable satisfaction" should not be produced by inexact proofs, indefinite testimony, or indirect inferences. 125 The evidence of the asserted act viewed by the respondent as serious misconduct, namely, the groping of a senior female employee by a male senior employee (who concedes such an act would constitute serious misconduct) could be categorised as circumstantial. No one actually saw the grope, although Ms Bradford was able to give clear evidence as to what she felt. I have been satisfied on the evidence the applicant was standing behind Ms Bradford at the time she felt a hand between her legs and that she reacted instantly and angrily and turned to the applicant standing behind her and responded using the word "grope". I find the evidence regarding the alleged incident sufficiently strong to satisfy that on the balance of probabilities, the applicant groped Ms Bradford. I find the evidence is sufficient to persuade, to the court's "reasonable satisfaction", that the groping of Ms Bradford by the applicant occurred. 126 The definite and direct testimony from witnesses and Ms Bradford satisfies the court, as it did the respondent, to the requisite standard that the incident occurred. 127 The gravity of the consequences flowing from the particular finding of sexual harassment was considered by the respondent. The respondent appropriately took into account the applicant's eight years of service in the context of his prior written warning and "chat" with Mr Hoban as to his behaviour at ABL functions. That consideration was fair. The termination of the contract occurred in circumstances when the employer determined it was unable to trust a senior employee to behave in a professional way. In the initial interview of 8 March 2004, Ms Rigg referred to the necessary trust between an employer and employee saying: . . . We need to be able to trust our employees in these remote offices to behave professionally at all times and do the right thing. 128 There was no submission made that this was conduct after hours and of no relevance to the employment contract. The conduct was clearly within a work related context. 129 I find on 25 February 2004, Mr Meggatt groped Ms Bradford during a game of pool after the ABL conference dinner. I am also satisfied, the act was unwanted, unwelcome and uninvited by Ms Bradford. There was touching and unnecessary familiarity in the act. The grope was an act of a sexual nature and I accept Ms Bradford felt humiliated and offended. I find this was an act of sexual harassment under the company's policy. 130 I find given the previous warning and notwithstanding his long term employment that it was an act properly termed "serious misconduct." I am therefore satisfied, under the contract, such an act is one of "serious misconduct" such as to warrant the termination of the applicant's contract of employment. 131 I find therefore that the determination made by the respondent, that there was an act of sexual harassment in breach of company policy which was "serious misconduct" and sufficient to establish a ground for dismissal, under the employment contract, was established. 132 The respondent alternatively submitted the applicant's case properly understood is a disguised "unfair dismissal" claim, or alternatively, a claim for breach of contract. Reliance is place on the view expressed by the NSW Court of Appeal in Sydney Water which considered part of a summons seeking relief according to s106 of the Act, as beyond the jurisdiction of the Court. An unfair dismissal type claim is precluded from a s106 claim by a specific section in the Act, namely, s109A. The applicant advanced a claim against specific clauses in his employment contract which gave discretionary powers to his employer and failed to define procedures to adopt in any investigation of alleged misconduct. He also claimed a lack of procedural fairness in the conduct the procedures adopted by the employer leading to an unfair determination by the employer under the contract of employment. The applicant seeks from the court a finding the contract was thereby unfair. Further, a monetary claim was advanced for just compensation for the conduct of the unfair contract. 133 As was held in Beahan v Bush Boake Allen Australia Limited (1999) 93 IR 1 at [42]: . . . s109A operates to exclude a contract of employment from the operation of s 106 only where the unfair contract claim is an unfair dismissal claim in disguise and where essentially it is of the nature of an unfair dismissal. Where a claim challenges the terms or operation of a contract of employment by genuine, not superficial or coloured, reasons related to the contract itself then, in our view, it is a claim properly within ss 106 and 109A has no operation in relation to it. A review of the allegations made in the present case, we are satisfied, discloses allegations directed to the contract of employment not to the applicant's dismissal. It is properly within s 106. . . . I am satisfied the application for variation of the terms of the contract and the relief sought challenges specific terms of the contract of employment and the claim is therefore properly brought within s105 and s106 of the Act. 134 The contract of employment was fair in its terms and remained fair during the investigation. The procedures adopted by the respondent for that investigation were fair. The determination by the respondent that the act by the applicant constituted serious misconduct was fair. The act of the respondent in terminating the contract of the applicant for serious misconduct was fair and in accordance with the terms of the contract of employment. I therefore reject the variations sought to the contract by the applicant. The issue of compensation does not therefore arise. There shall be no order for relief to the applicant. The claim for just compensation is rejected. 135 The Summons is dismissed. I will hear the parties as to costs. Orders 136 For all of these reasons, I make the following orders: 1. I declare the contract of employment between the parties was not an unfair contract within the meaning of s105 of the Act. 2. The application brought under s106 is dismissed. 3. Leave to relist as 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.