Industrial Court of New South Wales CITATION: Boniface v SMEC Services Pty Limited and anor [2007] NSWIRComm 301 APPLICANT: Jack Allan Norman Boniface PARTIES: RESPONDENTS: SMEC Services Pty Limited SMEC Holdings Limited FILE NUMBER(S): 343 of 2002 CORAM: Marks J CATCHWORDS: S106 unfair contract proceedings - allegations of unfairness based on lack of provision in contract of employment for resolving disputed expense claims, allegations of misconduct and response thereto and provision for notice of termination - applicant was director and chief executive officer - applicant asked to respond to allegations of misconduct, particularly re expenses - applicant failed to adequately respond - applicant claims explanation was given - applicant summarily dismissed - applicant misconducted himself - applicant failed to make out any grounds of unfairness asserted against respondents - no finding of unfairness - reflection of community standards - applicant was aware of allegations against him and was given fair and reasonable opportunity to respond - respondents justified in summarily dismissing applicant - application dismissed LEGISLATION CITED: Corporations Law ss 180, 181, 182, 286, 297, 301 Industrial Relations Act 1996 ss 105, 106 Chew v The Queen (1991-1992) 173 CLR 626 Concut Pty Ltd v Worrell [2000] HCA 64 Daniels v Anderson (1995) 37 NSWLR 438 CASES CITED: R v Byrnes (1995) 183 CLR 501 Schwartz v Central Sydney Area Health Service & Anor [2002] NSWIRComm 79 Shepherd v Felton Textiles of Australia Ltd (1931) 45 CLR 359 South Australia v Marcus Clark (1996) 66 SASR 199 HEARING DATES: 9 - 13 July 2007, 20 Aug 07, 27 - 31 August 2007, 3 - 6 September 2007, 9 November 2007 DATE OF JUDGMENT: 13 December 2007 APPLICANT: Mr P Menzies QC with Ms E Brus of counsel Solicitors: Coleman & Greig Mr S Booth LEGAL REPRESENTATIVES: RESPONDENTS: Mr J Fernon SC with Mr N Manousaridis of counsel Solicitors: Baker & McKenzie Mr C Oliver JUDGMENT: INDUSTRIAL COURT OF NEW SOUTH WALES CORAM: Marks J Thursday 13 December 2007 Matter No IRC 343 of 2002 Boniface v SMEC Services Pty Limited and anor Application under s 106 of the Industrial Relations Act 1996 JUDGMENT [2007] NSWIRComm 301 1 These are proceedings brought under s 106 of the Industrial Relations Act 1996 ("the Act"). The applicant is Jack Allan Norman Boniface. The respondents are SMEC Services Pty Ltd and SMEC Holdings Limited. The proceedings arise out of the termination by the first respondent, SMEC Services Pty Ltd ("SMEC Services") of the applicant's contract of employment, which was terminated summarily. The applicant seeks a finding that his contract of employment was unfair, and orders that it be varied accordingly and that he be paid monetary compensation. 2 There was doubt raised during the proceedings concerning the precise relationship between the applicant and each of the respondents. The parties sensibly agreed that, for the purpose of the proceedings, the Court would treat the relevant contract of employment as one between the applicant and the respondents in a general sense and that it was unnecessary to differentiate between either of the respondents. I shall proceed on this basis. 3 Relevantly ss 105 and 106 of the Act are in the following terms: s 105 Definitions In this Part: "contract" means any contract or arrangement, or any related condition or collateral arrangement, but does not include an industrial instrument. "unfair contract" means a contract: (a) that is unfair, harsh or unconscionable, or (b) that is against the public interest, or (c) that provides a total remuneration that is less than a person performing the work would receive as an employee performing the work, or (d) that is designed to, or does, avoid the provisions of an industrial instrument. s 106 Power of Commission to declare contracts void or varied (1) The Commission may make an order declaring wholly or partly void, or varying, any contract whereby a person performs work in any industry if the Commission finds that the contract is an unfair contract. (2) The Commission may find that it was an unfair contract at the time it was entered into or that it subsequently became an unfair contract because of any conduct of the parties, any variation of the contract or any other reason. (2A) A contract that is a related condition or collateral arrangement may be declared void or varied even though it does not relate to the performance by a person of work in an industry, so long as: (a) the contract to which it is related or collateral is a contract whereby the person performs work in an industry, and (b) the performance of work is a significant purpose of the contractual arrangements made by the person. (3) A contract may be declared wholly or partly void, or varied, either from the commencement of the contract or from some other time. (4) In considering whether a contract is unfair because it is against the public interest, the matters to which the Commission is to have regard must include the effect that the contract, or a series of such contracts, has had, or may have, on any system of apprenticeship and other methods of providing a sufficient and trained labour force. (5) In making an order under this section, the Commission may make such order as to the payment of money in connection with any contract declared wholly or partly void, or varied, as the Commission considers just in the circumstances of the case. (6) In making an order under this section, the Commission must take into account whether or not the applicant (or person on behalf of whom the application is made) took any action to mitigate loss. 4 The applicant was born on 10 September 1940. He commenced employment with the Snowy Mountains Hydro Electricity Authority in about November 1966. That organisation was corporatised and in about November 1992 a management buyout resulted in the Snowy Mountains Engineering Corporation being acquired by SMEC Holdings Limited. The applicant was a principal in the management buyout. From November 1992 until May 2000, he was the chairman and chief executive officer of SMEC Holdings Limited and of its subsidiary companies of which SMEC Services Pty Ltd is one. In May 2000, the applicant ceased to be the chief executive officer of all of the subsidiary companies except for one. His role with SMEC Holdings was changed to that of chief executive, project development. Accordingly, from May 2000, the applicant's executive position with the SMEC group of companies was lessened. In December 2000, the Board of Directors of SMEC Holdings resolved to remove the applicant as chairman of the various companies in the SMEC group. On 24 October 2001, the applicant was not re-elected as a director of SMEC Holdings. 5 The applicant alleges that as at 25 October 2001, his contract of employment with SMEC Services included a provision allowing for termination on four weeks' notice. 6 The applicant alleges that his diminished position in the companies forming part of the SMEC group was reflective of differences of opinion that had developed with respect to his management style and his managerial role as well as his role as chairman. He asserts that fellow directors, both executive and non-executive, deliberately set about to undermine his position and to connive at the creation of circumstances that might bring about the termination of his employment within the SMEC group. The applicant was asked on a number of occasions to respond to certain allegations involving alleged misconduct on his part, particularly with respect to the incurring of certain expenses. He said that he did respond and did provide an explanation with respect to those expenses. Nevertheless, his employment with SMEC Services Pty Ltd was terminated on 25 October 2001 without notice and without the payment of monies in lieu of notice. 7 The applicant's employment was terminated by means of a letter signed by Mr Peter Busbridge, Chief Operating Officer, dated 25 October 2001 under the letterhead of SMEC Services Pty Ltd. Significantly, the reason given for the termination of employment was set out in these terms: "At a Board Meeting on 25 October 2001, Board members had the opportunity of reviewing your written response of 27 September 2001 to various allegations contained in a letter from the Chairman date 30 August 2001. Taking into account the nature of the allegations and your responses, the Board resolved that you have engaged in conduct which is destructive of the employment relationship and that the Board no longer has the necessary level of trust in you as an employee. The Board further resolved that I advise you of the termination of your services." 8 In order to understand the matters which were asserted to have motivated the Board to terminate the applicant's employment, it is necessary to have regard to the contents of the two letters referred to. 9 The first is the letter dated 30 August 2001. That letter stated that the Board "has had concerns about various expense claims made by you and about certain transactions in which you appear to have been involved" since about May 2000. It refers to explanations sought by the Board through its Audit Committee and a recommendation made by that committee to seek information with respect to a number of specific matters described in the letter. There was attached to that letter a number of documents said to be relevant to each of the specific queries about which an explanation was sought from the applicant. 10 By letter dated 27 September 2001, the applicant responded by providing certain information and by referring in part to responses that he had previously given to the Audit Committee with respect to some of the specific queries raised by the Board. In order to deal with the queries raised by the Board and the applicant's response for the purpose of these proceedings, it will be necessary to go in some detail to each of the matters, which I shall deal with later in these reasons for judgment. Alleged unfairness 11 The applicant says that his contract of employment with SMEC Services was unfair in three ways. Firstly, the respondents sought to change a long standing practice by which he claimed expenses and sought to compel him to commence to produce original invoices with respect to claims which went back many years and which at that stage he was unable to support by original documents. Furthermore, it was said that some of these expenses involved the payment of monies to intermediaries who had assisted in gaining international contracts for the SMEC group in circumstances where it was necessary to bribe certain persons to ensure that contracts were awarded to the SMEC group. The applicant asserted that a number of executives within the SMEC group were aware of this practice and it was considered a normal incident of the way in which the SMEC group was forced to conduct its business activities in gaining certain international contracts. In questioning these practices in the year 2000 and beyond, the respondent was acting unfairly. The second area of unfairness concerned the procedure adopted by the respondents in declining to properly accept the explanations that the applicant gave with the respect to the expense claims. It was said that procedural fairness was, in effect, sacrificed because of the overwhelming desire of certain executives to ensure that the process of investigation and requiring the applicant to justify his actions brought about his dismissal from employment. The third area of unfairness was said to be the provision in the applicant's contract of employment with SMEC Services that allowed for termination upon one month's notice. It was said that in all the circumstances of the applicant's employment, a period of notice of one month was profoundly unfair. 12 At the time of the termination of his employment, the applicant's salary package was approximately $220,000 per annum. The applicant asserted that a period of four years' notice should have been given in all the circumstances, which would have resulted in an amount of about $880,000 being awarded to him by way of "just compensation". Furthermore, the respondents had withheld the sum of $140,000 claimed by him for expenses and he sought an order from the Court that he be awarded monetary compensation in this amount. The factual background 13 The factual narration that follows is based on the oral and documentary evidence given in the proceedings. I should add that the documentary evidence consisted of about 10,000 pages, some of which was repetitive. The proceedings were conducted principally by reference to the queries raised by the Board and the applicant's response to them by reference to the decision to terminate the applicant's employment as formulated in the letter of 25 October 2001. In discussing the applicant's responses to each of the queries, it is necessary to traverse in some little detail the circumstances in which the queries were raised by the Board and the applicant's conduct in dealing with them. 14 The SMEC group of companies operated substantially under two principal divisions. SMEC Operations was concerned, as the applicant described it in evidence, with "the traditional role of design, contract supervision, feasibility studies and project management." Its work was performed both within Australia and overseas. Whilst the main area of expertise was said to be hydroelectricity generation, SMEC was also involved in the construction of highways and in transportation generally. The work of SMEC Operations was as engineering consultants. SMEC would be involved in the design of a project and in managing the construction phase. Furthermore, in some cases it would supervise the operation of a power station until handed over to the client. In evidence, the applicant referred to a hydroelectricity power station in Malaysia. He also referred to bridge construction projects and highway projects in Indonesia, highway projects in India and in Pakistan. In connection with these overseas projects, the applicant said that it was usual to appoint local agents to facilitate SMEC being short-listed to undertake a project, to advise on other consultants and associates who should be involved in the project and to do anything that was possible to ensure that the project was won by SMEC. The applicant said that it was common practice in some countries for the payment of monies to certain persons, including politicians, to ensure that SMEC was successful in its tender. He said that the price charged by SMEC was increased to accommodate the amount of any such monies paid. 15 The applicant described the work of SMEC Developments as being the development of an idea or concept into a project in which SMEC would receive either a development fee and be engaged in the design, construction and supervision of the project or it would take an equity interest in the project. One such project was the construction of a hydroelectric power station in Nepal for the purpose of exporting power to India. 16 The applicant was intimately involved in negotiations with respect to many of these overseas projects including seeking venture capital either for the initial stage of the project or for its development. It was his evidence that such venture capital was to be more readily obtained outside traditional banking sources. 17 The applicant used the West Seti project in Nepal as an example of his involvement. He said that initially SMEC had undertaken development work on the project at a cost to itself of about $7 million. It was necessary to raise about $30 million in venture capital so as to protect this initial investment. 18 The applicant said that he was involved in the acquisition of a number of "promotional items" used as gifts, which were intended to generate goodwill amongst persons. He said, "It can be from a simple pen - usually the pens aren't too cheap. Probably a $100 pen up to a quite expensive watch or a laptop computer." The applicant described the more expensive gifts as being given to ministers, departmental heads and chief engineers. 19 In order to undertake his work involving these overseas projects, the applicant travelled frequently and extensively overseas and incurred certain expenses by way of travel, accommodation and the like. 20 The applicant said that he paid all of his expenses by credit card, mostly Diners' Club. From about November 1993 he had claimed all of his expenses incurred at hotels as a lump sum using the credit card receipt only by way of justification. Since 1968 he had claimed all of his entertainment expenses solely on the basis of credit card receipts, without producing receipts, accounts or invoices from hotels or restaurants. He said that this was consistent with a resolution of the Board of the company that acquired SMEC in September or October 1992, although he was unable to produce a copy of any Board minutes dealing with this matter. This practice was queried, however, by the then General Manager Corporate of SMEC Holdings, Mr Manfred Claasz. Mr Claasz asked that the applicant produce the originals of expenditure documents. 21 The applicant had made arrangements with the respondents for his monthly Diners' Club account to be paid in its totality on the basis that the applicant would later submit lists of expenditure for reimbursement, such expenditure when approved to be deducted from what was, in effect, an advance made by the respondents to the applicant for the payment of his total Diners' Club account each month. 22 In justification of relying on the credit card statement only to validate hotel, restaurant and other travelling expenses as well as the payment of promotional expenses and the like without producing original invoices or accounts, the applicant said that it would have been too difficult for him to keep copies of all the relevant paperwork and to carry this paperwork back with him to Australia at the end of each of his trips. 23 The genesis of the disputation between the applicant and the respondents with respect to the manner and method in which he submitted expense claims can probably be traced to a memorandum from Mr Claasz to the applicant's then personal assistant dated 29 June 1998. It referred to nine accounts for payment, which had recently been received, only one of which had an original docket attached. The memorandum asked for the remaining eight claims to have the originals of dockets attached, noting that some of the dockets "are dated as far back as 1992. Would you please obtain supporting details from your diaries to provide payment justifications for these accounts." 24 The applicant responded by way of handwritten notation dated 6 September 1998, some ten weeks later. The note merely said that the applicant had been submitting his travel expense claims "in the same manner for the past 20 years with photocopies of the documentation", and there had been no problems. He said he wanted to retain original documentation because they were lost by corporate services personnel and because of disputes with credit card firms "which are increasing. If this arrangement has been satisfactory for the past 20 years I don't see any justification for changing it now." 25 There is evidence that Mr Claasz continued to pursue the applicant with respect to the manner in which he made claims for reimbursement of expenses including travel expenses and the documentation that Mr Claasz thought should appropriately be provided in support of those claims. The evidence is that this occurred throughout 1999 and came to a head when Mr Claasz took the matter up with Mr Robert Scott who was then Chairman of the Audit Committee. 26 In a memorandum dated 21 December 1999, forwarded to the applicant, Mr Claasz dealt with certain aspects of his travel expense claims. He said that he was unhappy with respect to certain claims made in November that year including a duplicated claim. He referred specifically to the manner in which claims were made through credit card vouchers, the failure to supply requisitions for the issue of air tickets for approximately $30,000 and the failure to provide what he referred to as "original documents" as required by the Australian Taxation Office. Furthermore, Mr Claasz asked specifically for hotel accounts to be issued "with a declaration as to whether there is any expenditure of a private nature. Again the original documents should be issued to us as there are FBT and Tax Compliance requirements to be met." 27 By memorandum dated 4 April 2000, addressed to Mr Scott, Mr Claasz raised a number of issues including the applicant's travel expense claims. 28 These matters should be seen against a background that at that stage the SMEC group was experiencing severe liquidity problems. 29 It was the referral of these matters by Mr Claasz to Mr Scott that initiated a process, which ultimately led to the termination of the applicant's employment. These steps included the seeking of advice by Mr Busbridge from Baker & McKenzie Solicitors concerning the applicant's conduct, the provision of that advice, a requirement imposed by the Board on the applicant to respond to certain concerns raised in the Baker & McKenzie advice, the referral of the applicant's response to the Audit Committee, the deliberations of the Audit Committee and its recommendations to the Board, the invitation to the applicant to respond to the Audit Committee concerns and a consideration by the Board of the applicant's response, which led to the termination of his employment. 30 As will be seen in the narrative which follows, the applicant persisted in the course of his dealings with representatives of the respondents and throughout the hearing of these proceedings in relying upon the course of conduct which he had followed for many years in claiming and justifying travelling and entertainment expenses. He does not appear to me to have considered at any stage whether the practices, which he had followed for many years, were appropriate. He appears to have concentrated his attention solely on justification of his conduct rather than assessing whether it was appropriate. An example is provided by the applicant's response to the request by Mr Claasz for the originals of documentation. Mr Claasz had told the applicant that this was required to be held by the respondents for the purposes of the Australian Taxation Office. The applicant's reaction to this was to seek an opinion from Dr Ludmilla Robinson, barrister at law, which was given to the applicant by letter dated 4 May 2000. That letter of advice commenced by describing its subject matter as being "Whether photocopies of receipts and documents evidencing expenditure claimed for the purposes of reimbursement of expenses can be regarded as sufficient evidence of that expenditure." The advice described the admissibility into evidence in court proceedings under the Evidence Act 1995 of photocopies of documents. The advice said, after considering s 48 of that Act, that "….it is unnecessary to produce an original document as evidence of the contents of that document…." The advice concluded that as photocopies were acceptable in court as evidence, they ought therefore to be accepted in the situation "where a much lower standard of evidence is required than in a court of law…." Such advice ignores, essentially, the requirements of the Australian Taxation Office ("ATO") and the circumstances in which the ATO might accept copies of originals. Fundamentally, however, the applicant failed to seek advice on the principal matter which ought to have occupied his attention at that time, namely whether or not his conduct and his insistence on the continuation of that course of conduct were appropriate in all the circumstances having regard to his position as an employee, as a director, and as the chief executive officer of the respondents. His attitude is also to be considered against his excuse of too much paperwork, which I have referred to in [22] above. SMEC Board letter to applicant 30 August 2001 31 As I have previously indicated, it was the applicant's response to this letter that motivated the Board to terminate the applicant's employment. The Board, under the hand of Mr Scott who by then was Chairman, sought explanations and further material from the applicant about ten designated matters. These were: 1. Expense claims 2. Transactions with Mercury International 3. Payment to Dr D L Caroline 4. Gold bullion transaction 5. Payments in relation to the Karun I and III projects 6. Payments in relation to the West Seti project 7. Payments to Engineering General Consultants 8. Transactions with Danubio Engineering Inc 9. Dealings with Thomas Moser and Moser Marketing and Co 10. Contact with the ABC and the World Bank 32 That letter was some ten pages in length with a large number of attachments. Those attachments dealt with specific matters, including, in particular, expense claims and included also invoices and other materials relating to a number of external persons and organisations the subject of enquiry contained within that letter. 33 The purpose of the letter of 30 August 2001 and the seriousness with which the Board considered each of the matters was specifically referred to in that letter. In my opinion, the applicant could have been in no doubt as to the overall gravity of the concerns expressed by the Board. The 30 August 2001 letter contained, in the penultimate paragraph, the following: "You will appreciate that the matters raised in this letter are of a very serious nature and, depending on your responses, may involve the termination of your services both as an employee and officer within the SMEC group. The purpose of this letter is to inform you of the concerns of the company and to provide you with an opportunity to respond…." The letter concluded with the following: "Please note that failure on your part to respond may result in the termination of your services. This matter will be treated in strict confidence and if you require any information please do not hesitate to contact (the company secretary)." 34 The applicant's response dated 27 September 2001 referred in general terms firstly to the fact that the applicant did not have a complete set of documentation to enable him to provide all the details that he would have liked, secondly to the fact that "some of the items in your letter are so old as to be irrelevant and certainly should have no bearing on this matter" and thirdly referred to the fact that "the procedures and documentation for assessing my claims have been in use for a considerable amount of time and the claims were certified for payment….(by a number of senior managers). There has been no previous comment from the Audit Committee or SMEC's auditors, particularly when you were the audit partner of Coopers and Lybrand, as to the adequacy of the supporting documentation." 35 The applicant then proceeded to deal with each of the items raised by the Board in the 30 August 2001 letter. 36 I shall now summarise the applicant's response to each of the items of enquiry, and in doing so I will, obviously, refer in summary form to the nature of each enquiry. Expense claims 37 There was attached to the letter a list of reimbursements for airfares submitted to SMEC by the applicant since August 1999. Some of those airfares dated back to July 1993. Six of them related to travel during the year 2000. The applicant was asked to provide the names of the passengers who travelled on the tickets that were purchased, the itineraries and the date and purpose of the journeys. It will be remembered that each of these items had been paid for by SMEC under the arrangement that the applicant instituted for payment of his Diners Club accounts in full on the basis that he would furnish supporting information to justify payment of these accounts by SMEC. The amounts claimed totalled in excess of $226,000. 38 The applicant's reply contained a tabulation of each of the airfares the subject of the Board's query with additional information being firstly the routing (except for six flights), the name of the person travelled and the name of a project. 39 Most of the travel was undertaken by the applicant. However, flights were undertaken on two occasions by S Hamer, an employee of the respondent, and on three occasions by S T Leong, a person to whom reference will be made shortly. One flight appears to have been taken also by R Robinson. 40 The information provided did not describe the purpose of the journeys as sought by the Board. 41 The second set of queries for expense claims referred to an attached list of amounts claimed as promotional items since April 1999. Each of the amounts exceeded $100 and totalled $65,391.88. The applicant was asked to provide details of what was purchased and who received each of the items. 42 In his response, the applicant said, "I cannot recall exactly the promotional items purchased and it is unreasonable to expect me to be able to provide a detailed listing of these items after such a long period has elapsed. The generic types of items I purchased were watches, perfume, jewellery, electronic organisors (sic), computer accessories, pharmacy medicines and alcoholic beverages. The people that these promotional items were given to are already shown on the claims." 43 It will be noted that the applicant did not identify by name any particular individual who had received any promotional item. A perusal of the claims, which he had submitted, identified in some cases the type of item, such as jewellery, alcoholic beverages and the like, but did not identify any person by name. There was merely a reference to the person's position. 44 The third type of material required by the Board was described by reference to an attachment that referred to a number of requests relating to various expense claims, which the applicant had made and he was asked to provide the particular information. This request referred to a specific number of items some of which it is necessary to refer to. 45 The first required an explanation as to "why claims for expenditure incurred between June 1998 to June 2000 have been overstated by approximately $34,000 by using an estimated exchange rate to convert overseas expenses to Australian dollars, when the actual amount was available from the Diners Club statement." 46 In his reply, the applicant said that for 33 years he had calculated exchange rate at either the US/AUD exchange rate on the last traveller's cheque he had obtained or the published exchange rate at the moneychanger at the Australian airport of departure and the published exchange rate of US dollars into local currency at the hotel where he settled his hotel account. He said that this was the only way he could submit those expenses reasonably quickly after returning from a trip. 47 As is obvious, the applicant's response throws up an exchange rate which when dealing with a local currency other than USD (the majority of his claimed expenses) involves a notional double conversion and, consequently, a loss to SMEC as claimed of approximately $34,000. Furthermore, given the evidence that the submission of claims by the applicant was often considerably delayed, there would seem to be no reason why the rate of conversion set out in the Diners Club account would not be appropriate. 48 The applicant concluded his response by saying, "I cannot see any logic or justification to attempt to retrospectively change this procedure when it had never been commented on before by finance and has certainly never been commented on by all of the auditors either in the Snowy Mountains Hydro-electric Authority or SMEC. This may be small compensation for other items not claimed." 49 It is clear that the applicant has conceded that he has gained from what is an inappropriate currency conversion process, yet seeks to justify his windfall gain by the inappropriate reasoning set out in [48]. 50 The next query related to an account from a London hotel, included within which was an airline ticket for GBP 3,351 plus a further GBP 165 handling fee. The applicant was asked to advise of the passenger's name, itinerary and date and purpose of travel. 51 The applicant's response was that the airfare charged was "for a change of routeing for me." No further details of any kind were given. The hotel invoice was dated 3 December 1999. 52 The next query related to an item on the same London hotel invoice for theatre tickets for GBP 96.40. The applicant was asked to advise the basis upon which he had claimed these for reimbursement. The applicant's response was that, "These tickets were entertainment for an associate in London." 53 No details of the name of the associate and the relationship of that associate with the SMEC organisation were provided. 54 A number of queries were raised with respect to accommodation charges reimbursed by SMEC to the applicant at the Holiday Inn, Potts Point. The applicant was asked why $7,815.25 was paid for accommodation there during May 1999 when, at the same time, the applicant was attending a conference in Bowral and a regional managers' conference in Cooma. The applicant responded that during May 1999 his wife suffered a stroke and was hospitalised in Sydney and he basically worked from the Sydney office and the Holiday Inn hotel. He said he curtailed his attendance at Bowral and was unsure as to the date of the regional managers' conference. He said he would only have been out of the hotel for one or two nights. The applicant had submitted claims for charges paid with respect to Betty Mather and Rod McLaren at the same hotel in May 1999 and for Christina Knudsen in October 1999. The applicant said that the former were his wife's mother and son who were visiting Sydney as a result of his wife's stroke. He said that preoccupation with his wife's condition and pressure of work and travelling may have precluded him from checking the hotel account properly. He conceded that those charges were not properly payable by SMEC. The applicant said he had no knowledge of how expenses for Christina Knudsen were charged to his Holiday Inn account. 55 The applicant was asked why he had submitted a claim for accommodation charges in both Sydney and Canberra on 12 October 1999. He said that one of the hotels must have made a mistake with the date. 56 When asked why the applicant had submitted a claim of $5,564.50 for accommodation at the Holiday Inn, Potts Point for the period 20 August to 10 September 1999 when he had submitted claims for overseas travel during this period, the applicant responded that this arose as a result of an attempt to break up his claims so that they could be approved for payment within the authority of the General Manager Corporate. 57 Such an explanation involves a concession that the claim was, at least, false in part namely as to its dates. 58 Furthermore, it was put to the applicant that documentation provided by the Holiday Inn at Potts Point indicated that more than one person was occupying the applicant's room. The applicant responded that, "To reduce paperwork, my wife and I usually ate sufficient meals outside the hotel to balance the cost of my wife staying in the hotel with me." The applicant also said that it was not unreasonable for his wife to accompany him because he was away from his home in Cooma so often. He further responded that whilst he was staying at that hotel, other SMEC personnel had meals with him and participated in facilities and refreshments, which were provided in connection with executive meetings held at the hotel. 59 The applicant was asked to explain the payment of expenses on behalf of certain named persons at a hotel in Dubai in December 1999. The applicant responded that they "….were financiers endeavouring to arrange venture capital finance in the UAE for the West Seti project. The lowest cost arrangement I could come to with them was to pay for some of their expenses while they were in the UAE. The other alternative would have been to pay them a fee for their services which would have been very much more expense." 60 A large number of items for taxi fares and porterage were detailed and the applicant was asked to provide some measure of support either by vouchers, entries on credit card statements or, if the payments were made in cash, copies of notes/diary entries or other records maintained by the applicant to support the various amounts claimed. There were almost 40 of these items, which ranged in date from 9 July 1999 to 3 December 1999. The bulk of the items exceeded AUD $100 in value. The applicant responded "As general comment on porterage I have sciatica and usually take a number of suitcases with me on trips to reduce the weight of individual lifts I have to make. Porterage at the Heathrow Airport London is very expensive of the order GBP 7.50 per item." He said the he would need further details of the currency before commenting further. He further responded that he had some notes at his residence in Cooma "but I usually do not keep them very long after submitting the claim." 61 The above narration deals with most of, but not all of, the items referred to in the Board's letter. Nevertheless, the responses are indicative, in my opinion, of a systemic and deliberate failure and, in some cases, a refusal to provide detail which, for reasons that I shall later explain, ought, in my opinion, have been reasonably provided by the applicant to the respondents in discharge of his obligations as Chief Executive Officer and director of the respondents. Transactions with Mercury International and S T Leong 62 The evidence in the proceedings was that the applicant on behalf of the respondents entered into a relationship with an organisation known as Mercury International whose business appears to have been conducted from Singapore and whose principal was Mr S T Leong. 63 By letter dated 14 June 1998 on the letterhead of SMEC, the applicant as Chief Executive Officer wrote to Mercury International for the attention of Mr Leong confirming the basis on which SMEC agreed to pay a commission "for the successful introduction by you of venture capital equity participants for the West Seti project in Nepal." Mercury International was only authorised to deal with companies that had previously been approved in writing by SMEC and which had entered into a confidentiality agreement. Specifically, the letter provided that, "Commission and expenses will only be payable to those whom we have authorised you to approach. Expenses will only be reimbursed when we have approved them before you incur them….There is no entitlement to commission until and payment is subject to the satisfactory negotiations and completion of appropriate agreements between SMEC and all the potential venture equity participants and to the contribution in cash of the participants agreed equity." A commission rate was fixed of 5% "of the cash sum contributed as equity to the project by the approval participant." 64 On 10 June 1999, the applicant forwarded a facsimile transmission to Mr Leong which said in part: "….I thought the amount of the invoice should be sing dollars about $160,000 but we can discuss the amount later. We will have to carefully word the invoice. I would like to get the invoice in June but it will be some months before SMEC will be able to pay the invoice. I will phone you from Australia on Sunday…." 65 Mercury International issued an invoice to the respondent on 17 June 1999 for an amount of US $153,000. The subject of the invoice was "SMEC West Seti Hydroelectric Project." The invoice amount was said to be payable for "fees for services rendered as an independent intermediary for assistance with endeavouring to seek venture capital for the West Seti hydroelectric project in Nepal during the period from January 1998 to May 1999." 66 There followed a summary of the service performance said to have been carried out by Mercury International which included "seeking and identifying potential finance sources, executing non-disclosure and confidentiality agreements, preparing SMEC corporate and project introduction documents, preparing and presenting project documents in stipulated format, submission of applications, structuring professional presentation and attending interviews and conferences in Singapore and travelling to UK, Europe and US, entertainment of visiting representatives from overseas, screening and appraising potential investors, introducing prospective VC subscribers and helping to arrange meetings for Mr Jack Boniface and making efforts to seek guarantors/collateral providers for project financing." 67 That invoice bore a signature over the typed name of S T Leong. 68 It is immediately apparent that services, which were the subject of that invoice, pre-dated the letter of confirmation by some six months. 69 Evidence given in the proceedings is that Mr Claasz queried the invoice with the applicant. The applicant personally authorised payment of that invoice. There is a notation on the invoice apparently in the handwriting of Mr Claasz to the following effect. "Agreement not sighted - signed at request of CEO only bearing date 20 September 1999." 70 It was the evidence in the proceedings that US$25,000 had been paid with respect to this invoice, the balance to be paid when the funding for the West Seti project was finalised. 71 The questions put to the applicant with respect to this matter traversed the nature of the applicant's business and personal relationship with Mr Leong, the names of prospective venture capital subscribers with whom he had met and when and why he had approved the invoice for payment even though the sum involved exceeded his authority and entitlement to payment was limited to a commission of 5% when negotiations with all venture capital subscribers were complete. 72 Furthermore, the applicant had previously indicated to the audit committee that Dalaace International Limited had been introduced to SMEC through Mercury International. The applicant had signed, in late 1998, agreements on behalf of SMEC relating to the financing of this project with both Dalaace International Limited and Pan American Global Group in which there was a commitment to pay these organisations 3% and 2.5% respectively of any amount raised by way of venture capital. Questions were posed to the applicant concerning the aggregate rate of commission of 8% or 7.5% including commission payable to Mercury International and the fact that the commitment entered into exceeded the applicant's authority. 73 In his response in connection with this matter, the applicant said, "The conditions and the type of work carried out by Mercury International have varied over time and were certainly different to that envisaged when the original agreement was made and therefore some payment of expenses was appropriate. Most to (sic) the expenses involved were approved verbally with the approval to go 'ahead' with a particular contact. … As the nature of Mercury International's function changed with time it would have been appropriate to negotiate a change of commission had Mercury International's endeavours been successful. The simple answer as to why I entered into such arrangements with these entities was to obtain venture capital for the funding of the current phase of the West Seti project. Some venture capitalists expect returns in excess of 50%. Perhaps I wasn't offering enough." 74 In his response, the applicant said that he had already produced sufficient evidence that Mercury International introduced Dalaace International Limited, that the audit committee was confused between his authority to sign contracts and his authority to approve payments and "The main reason for the date of committing the arrangement in writing was of the timing of a visit to Singapore in conjunction with other travel to discuss the details face-to-face." 75 Finally, the applicant referred the Board to his previous response to the audit committee. 76 In my opinion, the explanation given by the applicant in the absence of any further evidence of any kind concerning any communications between him and Mercury International is unsatisfactory. His explanation that the conditions and type of work carried out by Mercury International and that its functions had changed is inconsistent with the content of the invoice from Mercury International which is clearly confined to work carried out in endeavouring to seek venture capital for the project. Furthermore, it is unassailable that the letter of appointment signed by the applicant as Chief Executive Officer of SMEC dated 14 June 1998 limits entitlement to payment to a commission upon the completion of the transaction. Any expenses are only to be reimbursed when approved before they were incurred. The invoice from Mercury International does not appear to claim any expenses. 77 Accordingly, I agree with the respondent's submissions that the applicant was not entitled in any way to authorise payment of the sum of US$25,000 to Mercury International. Furthermore, the applicant has failed to give any satisfactory explanation why work said to have been performed by Mercury International between January and June 1998 was not the subject of any written agreement. These observations are made without reference to the approval by the applicant of payment of the totality of the invoice of US$153,000 at some stage in the future. This, of itself, is subject to the same criticism as made above. 78 In evidence in the proceedings, Mr Boniface sought to assert that the written agreement with Mercury International had been changed orally or that there was in effect a new agreement made orally. However, the applicant was unable to articulate the details of any changed or new agreement so made, and his assertion that there was either a changed or new agreement was inconsistent with representations that he had previously made to the audit committee and officers of the respondent. The applicant had endeavoured to address this matter in an affidavit, which became evidence in the proceedings. He said, in part, "In my experience, it was common for agency agreements to include a retainer provision, which gave the agent a fund to cover expenses. That clause did not appear in the agreement with S T Leong (Letter of 14 June 1998….), which was intended to cover investigation of one potential source of finance only. However, as S T Leong continued to investigate further finance options with my approval, I considered that it was reasonable to allow him some payment. My perception was that it was substantially less than the expenses that he had incurred." 79 In the context of the totality of the evidence in the proceedings I find such an explanation unsatisfactory. There was no indication that the relationship with Mercury International as originally reduced to writing was intended to cover investigation of one potential source of finance only. There was no indication given concerning any particular expenses incurred by Mercury International that would justify reimbursement in some manner inconsistent with the original letter of appointment. There was no evidence of Board or other approval or knowledge of the applicant's dealings with Mercury International as referred to above. 80 The applicant did not respond directly to the request for information about his relationship with Mr Leong. However, the applicant had informed the audit committee that the relationship was one that was "strictly business". 81 As the evidence in the proceedings disclosed, the relationship between the applicant and Mr Leong was not confined to the retention of Mercury International to secure venture capital funding for the West Seti project. Evidence from documents produced to the Court during the hearing by ABN Amro Bank for the purpose of these proceedings was to the effect that on 22 May 1992, an account was opened at the Singapore branch of that bank in the name of S T Leong. The applicant was authorised to operate that account. Mr Leong was not authorised to operate that account without the signature of the applicant. The address shown for the account was that of Mercury International in Singapore. As will be seen later in these reasons for judgment, monies were paid into that account pursuant to a false invoice. I should observe at this stage that the applicant did not at any relevant stage voluntarily disclose to SMEC personnel the fact that he was the principal person involved in the operation of that account. Indeed, when the applicant did direct that certain monies be paid to that account he declined to name the account but gave only the account number to the relevant SMEC personnel. 82 I conclude on the basis of the evidence that the applicant concealed from other SMEC personnel the existence of his involvement in that account. In affidavit evidence filed in the proceedings, the applicant referred to a payment of $SGD24,460.96 to the S T Leong account on 25 January 2001. He said that this was a personal banking transaction and that he had business interests with S T Leong "with regard to commodity trading." Furthermore, he said that his business association with S T Leong occurred after he had left employment with SMEC. He said, "Although I knew him while I was an employee of SMEC, I had no personal business dealings with him during that period, and had nothing to disclose to SMEC in that regard." 83 Whilst I found some of the applicant's explanations during the course of giving evidence to be confusing, it would seem from his oral evidence given in the proceedings that on 15 January 2001 he advised the audit committee that his relationship with Mr Leong was "strictly business". However, on 25 January 2001, some few days later, the applicant drew monies out of the S T Leong account for $SGD24,460.96 and paid those monies to Mr Leong. The tenor of the applicant's evidence is that those monies were the property of the applicant and that they were being paid to Mr Leong as an advance with respect to business interests which he and Mr Leong might develop after the applicant had left the employment of SMEC. This was notwithstanding that at that stage the applicant was still employed by SMEC and remained so employed for many months thereafter. 84 In fact, the payment to Mr Leong together with the payment of some further bank fees were sufficient to clear out the outstanding credit balance in the account. 85 For completeness, I note that some of the details concerning this account were not made known to the respondents until after the termination of the applicant's employment. Notwithstanding this, the respondents are, as a matter of law, entitled to rely on such matters in justifying misconduct sufficient to enable summary dismissal. (See discussion at [203]). 86 As the respondents submitted, it is difficult to comprehend with any precision the precise relationship between the applicant and Mr Leong. That difficulty has been created by the applicant's prevarication. What is clear, however, is that the applicant did have a relationship of a personal kind with Mr Leong as at the date that he responded to the audit committee and as at the date that he incorporated that response to the Board by reference to the payment of the monies made by him to Mr Leong in January 2001. 87 I shall make further comment with respect to payment of monies into this account with respect to other matters raised in the Board letter. Payment to Dr D L Caroline 88 The Board letter referred to an agreement arranged by the applicant and made on 8 January 1999 between SMEC and Dewi Laxmi Caroline of the Philippines, which agreed to pay a fee of 1.5% of project finance secured for projects carried out by SMEC. There was further provision for reimbursements of costs and disbursements provided that they were pre-agreed, approved by SMEC and were the subject of an invoice. 89 Dr Caroline presented an invoice dated 14 July 1999 "being for fees and disbursements as per the agreement of 8th January 1998" in the sum of AUD$50,000. That invoice was paid. 90 The Board sought details from the applicant as to how entitlement to those fees arose, details of any disbursements and prior approval to incur expenditure, the fact that the applicant had authorised the payment to be charged to the West Seti project in Nepal and the fact that the applicant had informed the audit committee that the payment was made to provide funds to Dr Caroline so that she could in turn pay a third party in connection with a particular project where water rights had been secured. 91 The applicant's written response was to the effect that that matter had been covered in his previous response to the audit committee. In his response to the audit committee, the applicant had advised that the payment was made "for promotional activities in the Philippines" with respect to a particular project, that the payment was "entirely appropriate at the time", that the relevant Philippines Governor had supported the project and SMEC's involvement and that any move to terminate the relationship with Dr Caroline "would simply demonstrate a complete lack of integrity on the part of SMEC." 92 The applicant has, in my opinion, failed completely to disclose the basis upon which Dr Caroline had become entitled to fees of $50,000 in accordance with the provisions of the written agreement. Furthermore, the applicant has failed to justify the accrual of that expense to the West Seti project. Gold bullion transaction 93 On 16 November 1999, the applicant on behalf of SMEC entered into an agreement with Dr Caroline in the Philippines whereby SMEC agreed to purchase "metal of substantial value" which Dr Caroline was in a position to offer for sale on behalf of "a party or parties in the Philippines." Proceeds of the sale were said to be used "for various infrastructure and agricultural projects within the Philippines…." The recitals to the agreement said that SMEC had a purchaser for the commodity and would arrange for the goods to be tested to the buyer's satisfaction. SMEC purchased a sample of the metal, which was gold, and paid a deposit of US$25,000 to acquire this sample, which was then to be tested in the Philippines, Dubai and Perth. The applicant visited Dubai and Switzerland to negotiate the sale of the gold with the prospective purchasers, but without success. SMEC has recovered US$10,000 of the deposit but has apparently lost US$15,000 from the transaction. 94 The Board sought an explanation from the applicant concerning the making of such an agreement, details of the prospective purchasers with whom the applicant met in Dubai and Switzerland and as to the current status of the transaction. 95 In his response the applicant referred the Board to his response to the audit committee. The minutes of the meeting of 7 September 2000 between members of the audit committee and the applicant record the concern of the committee as to why SMEC was involved in such a transaction but nothing further of relevance. Mr Robert Scott, the chairman of the audit committee, said in affidavit evidence that he pointed out to the applicant that SMEC was not a commodities trader and asked why the company was involved in the transaction. The applicant replied "We've been asked to help because I know people in Dubai who can assist." There was no other discussion that Mr Scott could recall. 96 In oral evidence, the applicant said that this was a transaction that was not part of the trading activities of the respondents. 97 I conclude that the applicant has given no satisfactory explanation as to why he led the respondents into a gold bullion transaction of this kind which was far removed from their normal trading activities and which has brought about a loss of US$15,000. Payments in relation to the Karun I and III projects 98 The respondents made no submissions with respect to the applicant's response about these matters. Payments in relation to the West Seti Project 99 The respondents made no submissions with respect to the applicant's response about this matter. Payment to Engineering General Consultants (EGC) 100 The letter from the Board records that a number of documents had been located in the records of SMEC. The first document referred to is an invoice from Engineering General Consultants of Lahore, Pakistan dated 5 April 1992. The invoice is said to be for "management, promotional and mobilization expenses in the sum of Rp27,500,000." (There is a typographical error that I have ignored). Payment was sought in rupee foreign exchange certificates. There was also an invoice dated 27 April 1992 from Engineering General Consultants addressed to SMEC claiming "advance for expenses detailed below as per clause 5.5 of the Contract." There is then itemised a large number of matters including consulting services, general advice, logistic support and the like. That invoice was for amounts totalling PKR27,600,000, less "previous advance" of PKR9,650,223 with a balance then said to be due of PKR17,949,777. The amounts are in Pakistani rupees. 101 There was also an undated handwritten memorandum from the applicant to a Mr Barry Ireland concerning "promotional costs, LIMP". This is a reference to the Lahore-Islamabad Motorway Project. It refers to an agreement to pay promotional costs of Rp27.5 million, the necessity to find a method of invoicing which "would pass audit", the choice of a suitable wording for the invoice and that it should be charged within the project estimate. The handwritten note also says "I had to pay Rp10 million from the (indecipherable) advance while I was in Pakistan. This is currently charged to SMEC equipment." There is then a reference to the difficulty in acquiring the appropriate currency or monetary instruments. Finally, the note says that "EGC are opening a bank account in Singapore into which the payments can be made." 102 A typed memorandum from Mr Ireland to the applicant dated 28 July 1993 sought a number of details about the LIMP project. Included was an explanation as to why the anticipated profit levels had dropped significantly, as to the level of fees paid, why $525,000 was paid before the invoice was received and paid in cash, what documentation existed to cover that sum, and ancillary matters. An undated typed response, bearing the applicant's name as General Manager International, appears to have responded to each of the enquiries raised by Mr Ireland. It contains reference to an agency commission payable to EGC of $190,000, the replacement of an initial pro forma invoice by a more detailed invoice being a "final document" dated 27 June 1992, and other matters which are not, presently, relevant. The invoice of 27 June 1992 is in evidence. It is in identical terms to that of 27 April 1992 save for the date. 103 The Board letter then notes that the applicant authorised payment of SGD$1,229,560 "as payment of EGC advance as per invoice" to an account at the ABN Amro Bank in Singapore number 45-08-262. The authorisation clearly relates to monies said to be payable to Engineering General Consultants. The authorisation does not refer to the name of the account. However, evidence in the proceedings indicates that this is the S T Leong account to which previous reference was made in [81] above. 104 The Board letter also referred to an invoice dated 16 February 1994 under the name of Engineering General Consultants addressed to SMEC seeking payment of AUD$82,280. The payment was said to be "in accordance with our agreement for the Pergau hydroelectric project in Malaysia, Engineering General Consultants hereby present its claim for services for providing advice to the Snowy Mountains Engineering Corporation on claims and construction management from 11 March 1992 to 15 February 1993." Payment was sought to account number 4035941 at the Singapore branch of ABN Amro Bank. Payment of that invoice was made on 25 March 1994. 105 Evidence given in the proceedings was that an account was opened with the ABN Amro Bank, Singapore in the name of Engineering General Consultants on 28 August 1992. The evidence is that the applicant was introduced to that bank by Mr Leong. The address given for that account was Mr Leong's address. One of the documents given to the bank at the time that the account was opened was a power of attorney in favour of the applicant signed by the managing partner of Engineering General Consultants "to represent the Engineering General Consultants aforesaid with respect to all matters affecting Engineering General Consultants with regard to business activities in Singapore." The document required to be signed by the bank with respect to the opening of the account was signed by the applicant as an authorised signatory. The applicant signed a resolution said to be passed by the Board of Directors of Engineering General Consultants that purported to give him sole authority to operate the bank account. 106 The account was closed on 3 May 2000. 107 There are copy cheques in the documents produced to the Court by ABN Amro Bank, which became evidence in the proceedings. They are all signed by the applicant. Not all are entirely legible. I list below some of the cheques that are clearly legible, all amounts being in Singapore dollars. 27/09/95 Pay S T Leong amount $10,000 10/07/96 " Cash " $12,500 27/07/96 " Cash " $20,000 28/08/96 " Cash " $68,500 02/10/96 " Cash " $3,000 19/10/96 " Cash " $12,000 01/11/96 " Cash " $1,000 27/11/96 " Cash " $12,000 25/01/01 " Leong Song Tin " $24,460.96 108 Each of the cheques was signed by the applicant. 109 I should add that until Mr Scott, on behalf of the Board and audit committee, became aware of the existence of the account and was informed by the Bank as to the circumstances in which it was opened, no disclosure had ever been made by the applicant concerning this account and its details and in particular his personal involvement as the sole person authorised to operate the account. 110 The Board letter referred also to the appointment of Engineering General Consultants as a consultant to SMEC to provide consultancy services for the Pergau hydroelectric project in Malaysia by letter dated 20 April 1994. The services provided were said to be in the construction, management and claims resolution field on an "as required" basis. An invoice dated 18 August 1994 claimed a total of AUD$82,280 with respect to services rendered in connection with the Pergau project and sought payment into the Engineering General Consultants' account with the ABN Amro Bank, Singapore. The applicant sought payment of this invoice and that it be charged to the Pergau project on 26 September 1994. 111 The Board letter referred to representation made by the applicant that the monies paid by SMEC, pursuant to the two invoices from Engineering General Consultants dated 16 February and 18 August 1994, were drawn out of the relevant account and paid to a Mr Lim for his assistance in winning the Pergau project. The Board letter then noted that SMEC had been informed by Engineering General Consultants that as at 21 July 1992, that organisation only had an agreement with SMEC with respect to the LIMP project, that it did not raise the invoice of 27 April 1992, it never received any payment in relation to that invoice and was not entitled to any advance with respect to that invoice. 112 In essence, the applicant was asked to explain all of these concerns. 113 In his response, the applicant said, "The EGC payments were made to Pakistani government officials and politicians for their support to assist in winning the Lahore-Islamabad Motorway Project. As stated in my manuscript memoranda to the then managing director Mr B Ireland. Presumably the payment was authorised by the then SMEC Board. The money was paid to EGC who presumably made the payments to the relevant Pakistani's (sic). Given the nature of the payments EGC would of course deny all knowledge of the invoices. Particularly when prosecutions are currently taking place for bribery and corruption on World Bank funded projects in Pakistan." 114 For completeness, I should add that the question of these accounts was discussed at a meeting of the Board on 24 October 2000 attended by the applicant. The evidence of Mr Scott is that the applicant was asked about whether he had access to the Engineering General Consultants' account. He said that he was not going to tell the Board whether or not he had access and conceded in oral evidence that he probably did say words to that effect. 115 Assuming, at its highest in favour of the applicant, that, in fact, a number of false invoices were created at the instigation of the applicant for the purpose of concealing monies that were payable to an individual who had arranged for the payment of bribes to government and other officials, as asserted by the applicant, the result is that the applicant has seriously misled the Board and the respondent companies as a whole in terms of the documentation created and the applicant has failed to disclose the payment of bribes to the Board. I shall deal with the question of bribes later in these reasons for judgment. Transactions with Danubio Engineering Inc 116 The Board letter referred to an agreement signed by the applicant on behalf of SMEC International Pty Ltd with Danubio Engineering Inc ("Danubio") by which the latter organisation was engaged to provide services in relation to the Pergau hydroelectric project. The agreement was dated 8 October 1993. On 5 July 1996, the applicant authorised the payment of an invoice from Danubio for an amount of AUD$80,472. 117 The Board letter pointed out that SMEC International Pty Ltd was not incorporated until 29 June 1994, that the invoice from Danubio stated that the bank account into which the funds were to be paid was in the name of Moser Marketing and Co with a Swiss bank in Zug and sought details of the transaction. The letter further noted that the Board was advised that the funds were remitted so that they could be paid to Mr Lim. The applicant was asked to advise how he became aware that the funds paid to Danubio were in fact subsequently paid to Mr Lim. 118 In his response, the applicant said, "I believed at the time that SMEC International was a trading entity. Other contracts may well have been executed in the name of SMEC International as it was a commonly used title at that time. This document was not back dated." 119 In a reply to queries raised by the audit committee, the applicant had said that he had used Danubio for the purpose of providing a conduit for payments to Mr Lim so that he could "establish different channels through which the payments could be made." In making this response, the applicant did not state at any time that Danubio was not a consultant on the Pergau project. 120 Again, prima facie, the Danubio invoice was false and, as submitted by the respondents, drawn for the purposes of misleading the respondents' auditors. No information was provided by the applicant that contains any reference to whether the payments were received by Mr Lim. Dealings with Thomas Moser and Moser Marketing and Co 121 The Board asked the applicant to give details of his relationship with Mr Moser. The applicant advised that he was acting as a fiduciary, that "Mr Lim advised me" and "the rest of this is covered in my previous response. My relationship with Mr Moser was purely business." Contact with the ABC and the World Bank 122 The applicant was asked a number of questions with respect to these matters. The respondents have not relied on these matters for the purpose of these proceedings. The applicant's submissions as to unfairness 123 The submissions made by the applicant concentrated on two principal areas. The first concerned the disputed expense claims and the procedures for dealing with them. The submissions were put a little differently to the manner in which the asserted unfairness was described in the summons, which I have earlier summarised at [11]. Nevertheless, the material contained within the submissions covers and comprehends the allegations of unfairness contained in the summons. Ultimately, they both involve a consideration of the methodology used by the applicant for submitting claims, the requirements imposed on him by the Board in its letter of 30 August 2001 and whether the Board was justified in terminating the applicant's services in consequence of his response. 124 The second principal matter referred to in the submissions concerned the four weeks' notice of termination provision in the contract of employment and as to whether this was unfair. Again, this is put somewhat differently to the allegations of unfairness contained within the summons. Nevertheless, in considering this aspect, it is necessary to determine whether or not the respondents were justified in summarily dismissing the applicant. This in turn will involve a consideration of the appropriateness of the processes adopted by the Board, whether the Board members were unduly motivated by a desire to rid themselves of the applicant, whether he was denied some form of procedural fairness and whether, ultimately, there was justification based upon the applicant's response to the Board's letter. Of course, if the applicant fails in all of these matters and fails to establish that the respondents acted unfairly in summarily dismissing him, then no amount of variation of the contract of employment to provide for a longer period of notice of termination will assist him in obtaining any ultimate relief in the proceedings. Alleged unfairness - no provision within the contract whereby disputed expense claims could be fairly and reasonably resolved 125 The applicant submitted that the failure of the contract to provide for any procedure to resolve disputed expense claims rendered the contract unfair. It was submitted on his behalf that since at least 1993, whilst CEO and Chairman of the respondents, the applicant had incurred expenses for travel, accommodation, meals, entertainment and promotional items and that for many years those expenses were reimbursed upon the submission of claims. It was then said that beginning with a period towards the end of 1999 the respondents' personnel unilaterally sought to change the method of payment, which affected to some extent claims made for expenses incurred before this time and therefore had a retroactive effect. 126 However, whether the failure to make provision for a term of the contract of employment that would enable resolution of differences constituted relevant unfairness for the purpose of s 106 depended upon whether in any event the respondents had conducted themselves unfairly. If there had been no unfair conduct, then the provision of such a procedure would be irrelevant to the ultimate outcome of these proceedings in affording any monetary relief to the applicant. 127 There was tendered into evidence a number of policy statements issued by the SMEC Board dealing with overseas travel, cash advances to staff and entertainment. A policy statement, dated 17 October 1993, created a policy dealing with approval of overseas travel by non-executive SMEC directors. A policy statement issued 23 November 1993 dealing with cash advances to staff made it clear that "claims are to be submitted in the standard format as soon as possible upon completion of the event for which the advance is provided. Submission not later than seven days after the conclusion of travel is considered reasonable. Where travel exceeds one month, a partial claim should be submitted at the end of each month." 128 "Operating instructions" issued 1 January 1998, when dealing with advances for short-term assignments/visits for staff travelling in Australia or overseas, said, specifically, "Staff staying in hotel accommodation on short-term assignments should be instructed to retain all original receipts. Duplicates or copies will not normally be accepted as receipts for the purpose of acquitting advance accounts. Claims for such expenses should be submitted at frequent intervals and in no case less than monthly." 129 An operating instructions form, issued 1 July 1994, dealt with the procedure for claiming reimbursement for claims for entertainment expenses. It made clear that claims for reimbursement should be made on a claim form or a schedule including particulars of the date of entertainment, number of guests, status of persons entertained, type of entertainment, where the entertainment was held and the details of expenditure. Furthermore, the document said, "Receipts should be attached for all items of entertainment expenditure." 130 Although some of these protocols may not have specifically applied to the applicant as Chief Executive Officer, and although he did not receive cash advances as such, it must be assumed that the applicant, as a Board member at all relevant times, was aware of these protocols. Likewise, the applicant should have been aware, in my opinion, that common sense dictates that even though he operated on a basis of acquittal of expenses against advances made after they were incurred, the same approach should have been adopted to the justification of expenses and their validation. 131 The applicant asserted that since 1968 he had claimed entertainment expenses solely on the basis of credit card receipts and without having to tender receipts, dockets or invoices from hotels or restaurants. 132 The applicant was offered a corporate Diners Club card but eschewed this offer on the basis that he remained personally liable for payment of the account even though it was issued in the name of the company. The applicant used his own personal Diners Club credit card for almost all of the expenditure that he incurred in the course of his employment. 133 The methodology that the applicant used was to submit each monthly Diners Club statement of charges to SMEC, which paid it in total, and debited that amount against a notional "advance account" in the applicant's name. As against this advance account, the applicant would then lodge expense claims, which, once accepted, were taken to have "acquitted" the appropriate amount from the advance account. Accordingly, as the respondents submitted, they had loaned the applicant from time to time amounts which enabled him to satisfy his Diners Club credit card payments, and the amount of any claims made for expenses incurred in the course of his employment would be treated as partial repayment of the loan. As I have previously said, the applicant operated since 1968 on the basis that he submitted claims for expenses solely on the basis of the credit card receipts without furnishing any underlying original documentation issued by restaurants, hotels etc. 134 When these claims for expenses were made, the applicant provided a covering memorandum stating that the expenses were incurred whilst travelling on official business and summarising the amounts spent at each location. The amounts were set out in the relevant local currency, converted into US dollars and the aggregate of the US dollars was converted into Australian dollars. 135 I have dealt elsewhere in these reasons for judgment with the basis of the currency conversion used by the applicant and the detriment suffered by the respondents as a result. 136 The first recorded difficulty that the applicant had in submitting these claims occurred in a memorandum dated 29 June 1998 from Manfred Claasz, the then General Manager Corporate Services, addressed to the applicant's personal assistant. The memorandum said "I have recently received nine accounts for payment and presumably they have been sighted by you. Of these only one has an original docket attached. The remaining 8 have photocopies attached. Would you please arrange to have the originals attached and return to this office. Some of these dockets are dated as far back as 1992. Would you please obtain supporting details from your diaries to provide payment justifications for these accounts." On 6 September 1998, the applicant handwrote a note on the memorandum, which he forwarded to Mr Claasz "Manfred, I have been submitting my travelling expense claims in the same form for the past twenty years with photocopies of the documentation including the period you were previously GMCS without any problems. Two reasons I used to retain the original is loss of documents by GS personnel and disputes with credit card forms which are missing. If this arrangement has been satisfactory for the past twenty years I don't see any justification for changing it now" 137 There were further exchanges between the applicant, his personal assistants on his behalf and Mr Claasz concerning the manner in which the applicant continued to claim reimbursement of expenses. Mr Claasz continued to seek the originals of documents including hotel and other invoices and the applicant continued to resist using any other methodology as a basis for his expense claims. Typical of the applicant's attitude was, "I have a system that works and if it ain't broke don't fix it." (A handwritten facsimile transmission from the applicant to his personal assistant dated 7 July 1998) 138 There is evidence that Mr Claasz again spoke to the applicant about this matter in October 1999. Furthermore, Mr Claasz declined to approve three overseas travel claims submitted by the applicant in November 1999, on the basis that the total amounts involved exceeded Mr Claasz's delegation. 139 On 24 December 1999, Mr Claasz handed the applicant a memorandum concerning his travel expense claims expressing concern that, in effect, the applicant was fundamentally approving his own expense claims, that the level of expenditure should be subject to approval by the Board, that there was no indication as to who had used air tickets costing approximately $30,000 and advising that the Australian Taxation Office required originals of claimed documents, including hotel accounts for the purpose of consideration whether there was any expenditure of a private nature which in turn would involve payment of FBT. These matters were the subject of a further face-to-face discussion on 25 January 2000 between Mr Claasz and the applicant. 140 To put the problem in perspective, figures provided by the respondents for the purpose of the hearing indicated that for the six month period July to December 1999, the applicant had charged a total of $219,758 to his Diners Club credit card, the bulk of which was submitted for reimbursement by the respondents. 141 In about March 2000, Mr Claasz complained to Mr Peter Busbridge, then the Chief Operating Officer of SMEC Holdings Limited, that he was having trouble dealing with the applicant's travel claims. Mr Busbridge told Mr Claasz that these matters should be raised by him with the audit committee. Mr Claasz did so in early April 2000. 142 Thereafter, Mr Robert Scott, then a non-executive director of the respondents and Chairman of the audit committee, became involved in the matter and in dealing with the applicant. By letter dated 12 April 2000, Mr Scott asked that the applicant comply with the respondents' expense reimbursement procedures. By letter dated 3 May 2000, the applicant responded saying in part that the company's policy was "unworkable and inappropriate requiring Board approval every time a director travels overseas and should be revised." 143 Thereafter, Mr Busbridge sought advice from Baker & McKenzie Solicitors concerning the applicant's expense claims. As a consequence of that advice, the Board met on 5 May 2000 to consider passing a resolution requiring the applicant to provide further details of his travel expenses. At that meeting, the applicant resisted any attempt to require greater specificity and denied that there were any specific guidelines in his terms of appointment as to levels of expenditure on travelling and associated costs. 144 As at that date, there is evidence that the applicant's Diners Club advance account was in debit to the extent of $326,359 because of the extent of outstanding claims that had not been processed by the respondents. However, even allowing for the amount of the then outstanding claims, there was approximately $195,000 worth of payments that had been made by the respondents and with respect to which no claim had been submitted by the applicant. 145 The Board proceeded to pass a resolution requiring the applicant to provide further details including the general nature of each item of travel, how expenses had been incurred and the reasons why, to whom payments had been made and, where appropriate, provision of original invoices. 146 The applicant responded by claiming that there was a general conspiracy against him, repeating that he had used the same format over many years and disputing that the level of detail required was necessary. He asserted that all he needed to produce was "a separate diary which shows the time of travel and the localities and an expense sheet which shows the details of the expenses claimed." 147 The applicant did not respond with any degree of particularity by providing any of the information and documentation required by the Board. 148 At that stage, Mr Alastair McKendrick became involved in dealing with the applicant. After employment for some time, Mr McKendrick had been appointed General Manager Finance on 30 May 2000 and from September 2001 was a director of SMEC Holdings Limited. He endeavoured to process a number of travel claims submitted by the applicant. 149 The question of the applicant's travel expense claims was referred to the audit committee, which met on 2 August 2000. Initially, the audit committee determined to refer certain matters to the respondents' auditors, Price Waterhouse Coopers, for investigation. The applicant objected to this course saying that it went beyond the authority of the resolution of the Board, complaining also that Price Waterhouse Coopers were not independent and that there was some apprehension of bias. The audit committee then determined to meet with the applicant on 7 September 2000. Before doing so, a list of items of expenditure had been forwarded to the applicant asking him to provide further information. At that meeting, the applicant stated that the audit committee was acting outside its authority, and indicated that he had not kept hotel bills and airline tickets. 150 The applicant continued to assert, particularly, throughout September 2000, that he was entitled to continue to claim expenses using the methodology as he always had and that he did not have relevant receipts for production. However, he did provide certain credit card vouchers and the like. The applicant was then asked to sign a letter authorising that information be given to the respondents so that they might write to the travel providers to seek copies of hotel accounts and the like. The applicant declined on the basis that some of the material might be private to him. 151 Despite asserting that he had no further documentation to produce, the applicant asked for a "precise list" of what documents were required on the basis that he would endeavour to obtain them. 152 In early December 2000, the audit committee formulated a report which it presented to the Board and which was considered as an interim report at the Board meeting of 19 December 2000. That report repeated concerns that the information and documentation provided by the applicant in support of travel claims were inadequate and recommended that the Board resolve that the applicant provide further information on or before 15 January 2001. The applicant responded claiming that he had forwarded all of the credit card receipts that he had on file, that he had been using the same method of currency conversion since 1972, that he had been using the same methodology for claiming travel expenses since 1972 and that he had not submitted other travel expense claims while there was an unresolved dispute. He said that he had now submitted claims resulting in him being owed about $84,500 by the respondents. This was the subject of seven claims lodged about that day by the applicant for travel expenses totalling approximately $109,000. Those expenses related to travel undertaken in November 1999, December 1999, February to March 2000 and May to June 2000. The procedure used by the applicant to make these claims was the same procedure that he had previously used and which by then he must have known was unacceptable to the Board. Furthermore, the applicant used the same procedure for converting foreign currency amounts as he had previously done. It was the evidence of Mr McKendrick that, with respect to one of these trips, the interest claimed exceeded the interest ascertainable by reference to the Diners Club card statement by more than $3,000. Furthermore, the periods of travel occurred after the time when Mr Claasz had raised his initial concerns with the applicant about the supporting documentation. Certainly, as at November 1999 and later, the applicant must have been on notice that there were some persons within the respondents' organisation who sought to have him produce original hotel invoices and copies of airline tickets, boarding passes and the like. 153 In January 2001, Mr McKendrick sent all of the applicant's claims paperwork for the period 1 July 1998 to 30 June 2000, including Diners Club statements against which payments had been made, to Price Waterhouse Coopers, the respondents' auditors. In February 2001, Price Waterhouse Coopers advised Mr McKendrick that the documentation showed the duration and destination of travel but in most cases not the reason for the travel. Accordingly, the auditors were unable to carry out a detailed audit of the expenditure to ascertain whether it was of a business nature. The auditors confirmed that the applicant should provide copies of detailed invoices or receipts from organisations who had provided services together with copies of flight tickets and boarding passes and the names of all passengers together with an explanation as to the purpose of each journey to each destination and the nature of the business conducted. Without this information it was said that the auditors would be unable to carry out an appropriate audit of the books of the respondents. 154 In February 2001, the applicant signed, on request, letters of authority allowing the auditors to obtain copies of invoices, receipts and other details of payments from various service providers. Having obtained certain information the auditors prepared a report dated 7 May 2001 with respect to certain expense claims. The report noted that for the period 1 July 1998 to 30 June 2000 the applicant had incurred charges on his Diners Club card of $588,356. Of this amount, $498,907 were expenses incurred in foreign currency. The applicant's claimed currency conversion had resulted in a charge exceeding the actual amount charged to the Diners Club statement in foreign currency by AUD$10,742. Furthermore, there was a total of AUD$73,900 expended on "retail items". 155 In May 2001, the applicant was asked by the Board to submit all outstanding travel claims. The applicant did so in about June 2001, again using the same methodology as previously, including the same basis of claiming foreign exchange conversion rates. 156 Since then, there has been disputation between the parties as to the extent of any monies owing by the respondents to the applicant for claimed expenses, which currently remains unresolved. This arises from the exchange of correspondence between the Board and the applicant seeking details concerning particular travel expenses, the nature of which I have previously referred to in these reasons for judgment. 157 There has been tendered into evidence a great amount of documentation concerning the applicant's travelling expenses and the methodology used by him in making claims. Exhibit N is a memorandum from the applicant to Mr McKendrick dated 15 January 2001 for travelling expenses 29 May to 9 June 2000. It is for a total claim of $20,824.34 with respect to "expenses incurred while travelling on official business in Singapore, India, Taiwan and Australia." 158 The "travel diary" shows that the applicant departed Canberra on 29 May 2000 and travelled (presumably via Sydney) to Singapore on the same day. He appears to have stayed overnight in Singapore and travelled the next day to Delhi. On 3 June 2000, the applicant travelled to Taipei and then returned to Australia on 7 June 2000, arriving in Sydney on 9 June. 159 The supporting documentation includes an amount of $11,170.70 paid on Singapore Airlines for travel Canberra-Sydney-Singapore-Delhi-Singapore-Taipei-Singapore-Sydney. This was charged to the applicant's Diners Club. There is a further sum of SGD$2,667 spent on an American Express card in Singapore on 29 May 2000 to purchase a Singapore Airlines ticket. 160 None of the documentation furnished by the applicant to Mr McKendrick contains any clue as to the reason for the purchase of that airline ticket in Singapore on 29 May 2000. In the course of cross-examination, the applicant was asked why he would need to purchase that air ticket in the midst of a trip that was already scheduled to take him to Singapore twice. The applicant then said that ticket was for Mr S T Leong "who had identified the potential venture capitalist in Taiwan and was accompanying me on the trip." It transpired that the trip to Taipei was for the applicant to meet a proposed venture capitalist who would be able to assist, presumably with venture capital for a project. It appeared that Mr Leong did not know the proposed provider of the venture capital but it was thought that he had had some involvement in raising venture capital for the construction of the Sydney Olympic Stadium. It was on this basis, presumably, that the applicant decided to expend time and money in visiting Taipei to meet this person and to pay for Mr Leong to accompany him and to act additionally as translator. Nothing came of that particular visit. There is not one reference to any of these matters contained in the information given by the applicant to Mr McKendrick. 161 Included with the documentation are an American Express voucher and a Diners Club voucher for the York Hotel in Sydney for 30 May 2000 and the Holiday Inn at Potts Point for 9 June 2000, in amounts of $354.60 and $648.75 respectively. There is no copy of any hotel invoice and there is no indication on these payments that the applicant stayed on those occasions at those hotels other than the fact that the cost was purchased on his credit card and that he signed the relevant vouchers. Likewise, there is a Diners Club voucher for the Hotel Imperial in New Delhi and two Diners Club vouchers for accommodation at the Miramar, location undesignated, on 6 June 2000. Presumably, the Miramar is a hotel in Taipei and presumably the invoices relate to accommodation for both the applicant and Mr Leong. One is for an amount NT$13951 and the other NT$13450. 162 It follows that none of the vouchers with respect to hotel accommodation indicates the name of the person who stayed in the establishment, any breakdown between room charge, meals, and any other expenditure or, indeed, the dates on which accommodation was provided and the number of persons who stayed in the room. 163 This narration is typical of the totality of the evidentiary material provided by the applicant to the respondents as a basis for claiming travel expenses. 164 Typical, also, of the lack of detail included in the applicant's claims and the confusion which that might create for the respondents' accountants and auditors, is an account for airline travel on British Airways for the purchase in Singapore of travel from Singapore to Brisbane and return. The voucher is for travel on British Airways, the passenger is shown as the applicant and the cost is for SGD$5,494. The expense was incurred on 17 January 2000. 165 When questioned about this account whilst giving evidence, the applicant said that he was probably able to purchase the ticket at a good rate and that he intended to use the Brisbane-Singapore return part of the ticket on some future occasion "because it was cheaper to buy the return ticket and use it on the next trip than to buy a one-way ticket which usually costs more anyway and probably wasn't a discount." Of course, such an explanation is entirely illogical because the applicant being based in Australia would always be buying a return ticket to wherever he was travelling to overseas. There would never be any occasion for him to buy a one-way ticket. 166 The applicant offered no explanation as to the circumstances in which he would use a one-way ticket on British Airways from Brisbane to Singapore and the manner in which he would account for its cost in the books of account of the respondents. 167 In dealing specifically with the question of expenses, the amended summons by which these proceedings are constituted sought "an Order declaring the contract void ab initio in so far as it permitted the Respondents to fail or refuse to pay expenses incurred by the Applicant in the course of his duties as an employee." In written submissions, the applicant's counsel said "Clearly and unfairly, the contract failed to provide for any procedure whereby disputed expense claims could be resolved." 168 In submissions in reply, the applicant's counsel referred to comments made in opening the applicant's case in identifying unfairness "as the requirement for the production of an original receipt….Now one would have thought that there must be a variety of ways in which the contract could provide for that matter to be dealt with in a way which would not bring about that…unfairness". 169 A brief reference to these submissions highlights the dichotomy that applies to the expenses issues raised in these proceedings. On the one hand, the Board determined to terminate the applicant's employment because of his failure to satisfy it with respect to a number of matters including, presumably, the question of expenses. On the other hand, the applicant asserts unfairness in that his contract of employment did not provide some mechanism for dealing with a dispute about expenses. Whilst both these matters revolve around the question of expenses, they involve a consideration of two distinct aspects of the applicant's expenses claims. 170 The applicant did not suggest, either in the amended summons or during the course of the proceedings, what type of provision he thought should be inserted into his contract of employment by way of variation that would inject the relevant fairness or, put another way, avoid any unfairness. 171 In my experience it is most unusual for a contract of employment to make any provision for a mechanism or process by which any dispute about expenses might be resolved. Indeed, no submissions of any specific kind were put on behalf of the applicant as to the processes adopted by the respondents in dealing with the disputation concerning the payment of the expenses. 172 The focus of attention in the proceedings was not the process for resolution of the controversy but the underlying processes for the submission and substantiation of expense claims. Indeed, a perusal of the applicant's submissions in dealing with the question of expenses is focussed entirely on this matter. 173 A consideration of the evidence about the dealings between the applicant and the respondents concerning his claims for reimbursement of expenses does not, in my opinion, indicate any conduct by or on behalf of the respondents that might be described as unfair. I will shortly consider what is involved in the concept of unfairness and the approach taken by the courts to ascertaining whether unfairness exists in any given circumstances. For present purposes, I refer to the extensive communications between persons on behalf of the respondents and the applicant concerning the methodology used by him for the claiming of expenses and the detailed and even tedious processes of firstly the audit committee and secondly the Board in allowing the applicant every opportunity to proffer such explanation as he wished concerning his claims for expenses. As I have previously stated, the applicant's attitude, in my opinion, has been coloured by his insistence and persistence in relying on what he perceived to be the correctness of his approach over many years without any consideration as to whether that approach may have been inappropriate. In any event, the evidence reveals that the applicant had been given every opportunity to satisfy the respondents, even at Board level, with respect to his disputed claims. 174 I reject any submission that the applicant's contract of employment with the respondents was unfair because it failed to make provision for any mechanism for dealing with disputed claims. Presumably, if such disputation could not be resolved at any level, it would be necessary for one of the parties to have recourse to the courts or some other mutually agreed arbitration process. Of course, it is arguable in these circumstances that any such steps would be more in the nature of enforcement of either expressed or implied contractual terms rather than seeking any particular variation. 175 I will return to the question of expenses when dealing with whether the Board acted unfairly in summarily dismissing the applicant. Alleged unfairness - four weeks' notice of termination 176 The second matter of unfairness dealt with in the applicant's submissions concerned the provision in the contract by which termination could occur on four weeks' notice. It was said that this was fundamentally and intrinsically unfair. I accept the applicant's submissions that such a provision was incorporated within his contract of employment on the basis of evidence given in the proceedings. No authority is required for the general proposition that at common law a contract of employment is a contract of indefinite duration terminable upon reasonable notice. What is reasonable will vary according to the exigencies and circumstances of the employment. In my opinion, a contract that seeks to fix a short period of notice in circumstances where that period could not, viewed objectively, be considered as "reasonable" as contemplated by the common law principles, is arguably unfair for the purpose of s 106 of the Act. However, ultimately any decision on this matter must abide a consideration as to whether, in all the circumstances, the dismissal of the applicant by the respondent on a summary basis and without the provision of any notice or payment in lieu was justified. If so, the question of notice does not arise for consideration and the applicant would not be entitled to any consequential relief. Accordingly, I will defer dealing with this matter until I have dealt with the final principal area of unfairness identified by the applicant. 177 The applicant asserts that his contract of employment contained no express provision dealing with any circumstances in which his conduct might be called into question by the respondents. Accordingly, it was submitted that as the contract failed to make any provision for the conduct of enquiries or investigations into alleged misconduct, it was prima facie unfair for the purpose of s 106. Furthermore, it was submitted that the respondents did in fact "engage in conduct which was prejudicial to the applicant's interests" in that he was denied procedural fairness by the respondents and because, in any event, the applicant was not guilty of any misconduct which would have justified summary dismissal. 178 In terms of procedural fairness, the applicant's submissions focussed on the processes adopted by the Board and the manner in which the applicant's responses were received. In particular, the applicant pointed to the letter of termination dated 25 October 2001. It was signed by Mr Busbridge as Chief Operating Officer. It said, relevantly, "At a Board Meeting on 25 October 2001, Board members had the opportunity of reviewing your written response of 27 September 2001 to various allegations contained in a letter from the Chairman dated 30 August 2001. Taking into account the nature of the allegations and your responses, the Board resolved that you have engaged in conduct which is destructive of the employment relationship and that the Board no longer has the necessary level of trust in you as an employee…." The applicant submitted that the letter is defective in that there is no particularisation of the conduct that, it is said, was destructive of the employment relationship. On one view of it, the applicant was left to guess which of the many allegations contained in the 30 August 2001 letter had been responded to in such a way that the Board had concluded that there had been conduct destructive of the employment relationship and that had taken away "the necessary level of trust" in the applicant as an employee. 179 The amended summons alleged that these circumstances created unfairness in that the respondents were permitted to terminate the contract without providing reasons, without allowing the applicant to respond to those particular reasons and in that the contract permitted allegations to be made against the applicant and to be investigated without permitting, as a matter of procedural fairness, the applicant to respond to those allegations. 180 A review of the evidence, which I have earlier summarised in these reasons for judgment, persuades me that the applicant would have been in no doubt concerning those matters about which the Board required information and documentation. Likewise, the applicant would have been in no doubt that these were matters that were viewed by the Board seriously. Accordingly, I would conclude that the applicant was at all times clear about what allegations were made against him in the context of the information and documentation which he was required to make available. Certainly, the applicant had participated in a process with the audit committee and, in addition, the Board had provided detailed documentation to the applicant with its letter of 30 August 2001. I would conclude that the applicant was given a fair and reasonable opportunity to respond to the concerns of the Board detailed in its letter. 181 However, this gives rise to the fundamental issue concerning the lack of specification in the letter of 25 October 2001. 182 The answer to this submission is that having concluded that the applicant could be in no doubt about the matters of concern raised by the Board and having been given an adequate opportunity to deal with each and every one of those matters, the fact that there is no specificity in the termination letter does not create any relevant unfairness because the letter makes it clear that it is only the Board's allegations and the applicant's response that are taken into account in coming to the decision to dismiss summarily. No prejudice can attach to the applicant because he had already had an adequate opportunity of responding to the Board's concerns. Accordingly, whilst one might gain an initial impression that the lack of specification in the Board's dismissal letter had created a degree of uncertainty and therefore unfairness, in reality there is no unfairness because the applicant had already had an opportunity to deal with each and every one of the matters which was comprehended within the Board's determination to summarily dismiss him. 183 For these reasons, I reject the applicant's submissions that there has been any relevant failure by the respondents to afford him procedural fairness in the process adopted by them to consider his conduct and in determining to summarily dismiss him. 184 This, therefore, leaves for consideration the notice question. I have previously observed that this only becomes relevant if it is determined that as a matter of fairness a period of notice of termination should have been given to the applicant. This in turn requires a consideration as to whether, viewed objectively, and taking into account all of the relevant circumstances of the employment, the summary dismissal of the applicant was unfair by reference to community standards and values. Determination of what is unfair for s 106 185 When determining matters of unfairness under s 106 and application of its provisions, it is clear that any value judgement exercised must be made on an objective basis having regard to, and reflecting, contemporary community values and standards. I have discussed my understanding of these matters in Schwartz v Central Sydney Area Health Service & Anor [2002] NSWIRComm 79 at paragraphs [71- 73] and [81- 82]. "[71] It is a trite observation that a pre-condition for the exercise of any power under s 106 is a finding that the relevant contract is unfair. A helpful discussion as to the approach of the predecessor tribunals to this Court to the determination of whether a contract etc is unfair is contained within the joint judgment of Fisher CJ and Hungerford J in the Industrial Court of New South Wales Full Court in Baker v National Distribution Services Ltd (1993) 50 IR 254. At 271 their Honours said: "The test of unfairness within the meaning of s 88F of the Industrial Arbitration Act, and hence s 275 of the present Act, has received much attention by the Court and by the previous Industrial Commission over very many years, but, in our review of the cases, the approach stated by Sheldon J in Davies v General Transport Development Pty Ltd [1967] AR (NSW) 371 over 26 years ago has endured; his Honour commented (at 374) that unfairness of a contract or arrangement was to be determined according to 'the common sense approach characteristic of the ordinary juryman ….It is a plain matter of morals not law.' His Honour cautioned, however, (at 374,375) that the section's 'massive power makes it imperative that it should be exercised with proper restraint … it should not permit itself to become a refuge for those who are merely disgruntled with a bargain entered into on even terms. … the discretion should be exercised to protect victims of wrong dealing not to prescribe anodynes.' Those words by his Honour echoed what had been said earlier by Beattie J in Agius v Arrow Freightways Pty Ltd [1965] AR (NSW) 77 at 89 that it was a matter of deciding 'in each particular case by the application of the tribunal's common sense and sense of justice whether a particular transaction is unfair, harsh and unconscionable'. The nature of the unfairness attracted by s 88F was considered later by the Industrial Commission in Court Session (Perrignon and Dey JJ, Cahill J dissenting) in A & M Thompson Pty Ltd v Total Australia Limited [1980] 2 NSWLR 1 at 13 as follows: 'It has been said that fairness is determined by the commonsense approach of a juryman and that it is a moral and not a legal issue ( Davies' case). Whether this be so or not, it does seem that in distinguishing between what is fair and what is not fair the Judge must apply standards which appear to him to provide a proper balance or division of advantage and disadvantage between the parties who have made the contract or arrangement. In doing so he would always have to bear in mind the conduct of the parties, their capability to appreciate the bargain they had made and their comparative bargaining positions when entering into the contract or arrangement.' (At 271-2). [72] It is my understanding that in determining whether there is unfair conduct for the purpose of proceedings brought under s 106 and especially under sub s(2), the Court is required to exercise a value judgment reflecting contemporary community values. The contemporary values may be derived from the commonsense approach characteristic of the ordinary, reasonable, hypothetical 'standard' member of the community. Such a person will be neither an employer nor an employee, must be careful to weigh up the competing interests of the applicant as an employee and the respondent as an employer and those interests must be accommodated and viewed objectively and balanced within the context of the factual matrix which applies to them. Such a process will accommodate the reasonable requirements and understanding of an applicant as an employee and the reasonable requirements and understanding of a respondent as an employer in the context of the needs of the employer to undertake its activities in an efficient, effective and competent manner. [73] Of course the identification of contemporary community values is not without its own difficulties. Some insight as to the difficulties involved may be gained from the discussion by Professor John Braithwaite in the article entitled 'Symposium on Community Values in Law' published in vol.17 of the Sydney Law Review at 351. Professor Braithwaite draws on a body of literature to make a distinction between community attitudes and community values, the former not necessarily assisting a court in determining a matter, the latter having much greater relevance. An obvious example of an attitudinal matter is the debate concerning abortion. The corollary and underlying value against which such debate is conducted is 'respect for human life, health, freedom of choice'." "[81] I have already referred to the process which is involved in determining whether a contract or arrangement etc or conduct is unfair. In the context of this process it is important to observe that there will be many cases where there is no absolute defining boundary which delineates what is fair from what is unfair. Often a range of conduct or activities may be said to fall within the limits of what is assessed to be fair, and, by corollary not unfair. This is because of the lack of absolute and scientifically determined criteria which differentiate the concepts of what is unfair. [82] The assessment which is to be made judged by the standard of the ordinary, reasonable, hypothetical "standard" member of the community is not capable of precise analysis and delineation. There will be a variety of opinions held by such a person. The exercise of a value judgment in these circumstances is obviously made more difficult, but it is a difficulty which is not confined to judges of this Court. By way of analogy, evaluations of what is "reasonable" are made daily by judges in all courts determining claims based on breach of duty of care in negligence, and those brought under certain provisions of the Trade Practices legislation." 186 One of the circumstances that must be taken into consideration is the position that was occupied by the applicant in the respondents' organisations. He was, at relevant times, Chief Executive Officer and a director. 187 There are some authorities that deal with the duties of directors and of directors who are Chief Executive Officers. 188 One such case is South Australia v Marcus Clark (1996) 66 SASR 199. These were proceedings that considered the circumstances of a person who was both managing director and chief executive officer of a bank. His positions of office were governed by South Australian legislation, which applied particularly to that bank, as well as by the common law. The proceedings considered whether that person owed a fiduciary obligation to the corporation and whether he was guilty of negligence at common law. Although there is a statutory basis for the consideration of the Court in those proceedings, there is also a consideration of the duties and obligations of a person in the defendant's position at common law. These obligations are, in my opinion, relevant to a consideration of the circumstances of the applicant's employment in these proceedings and I refer to them and adopt them accordingly. In the course of his judgment in Marcus Clark, Perry J adopted a formulation by Clarke and Sheller JJA in the New South Wales Court of Appeal in Daniels v Anderson (1995) 37 NSWLR 438 where their Honours said, (at 505 - 6) that there was "A general requirement that (directors) exercise reasonable care in the performance of their office." Perry J noted that this general observation was reflected in the provisions of the then Corporations Law, a matter to which I shall make reference later in these reasons for judgment. In assessing the duties of the defendant in those proceedings, Perry J noted that, "rather than having regard to the statutory provisions which applied to his office, or the terms of his contract of service which defines his duties only in the most general terms, it is more important to have regard to the realities and practicalities of the position which he held. As the Chief Executive Officer and Managing Director of a large bank, he was obliged to bring to bear an appropriate level of skill having regard to the responsibilities which that office entailed. No doubt, as is the case with all large corporations, it was necessary for him to delegate responsibility for the operation of different functions of the bank, in circumstances where no further oversight could be expected. But he must unquestionably be regarded as responsible for the overall control of the operations of the bank, both in a day-to-day sense and in giving effect to the broader policies spelt out in the Act and by the Board of Directors. Furthermore, it is clear that the Board of Directors looked to him and relied upon him not only to provide to the Board full and accurate information as to all of the matters which it was proper for the Board to consider, but to see to it that any specific decisions of the Board were implemented in a way which did not expose the Bank to unnecessary risk….There is no question but that the requirements of his office imposed upon Mr Marcus Clark a duty to act in accordance with the highest standards of competence and integrity applicable to the banking industry." (At 221) 189 Many of the cases that deal with the duties of directors arise out of prosecutions for breach of the relevant corporations law. I instance two cases in the High Court of Australia, namely Chew v the Queen (1991-1992) 173 CLR 626 and R v Byrnes (1995) 183 CLR 501. Notwithstanding that those cases dealt with prosecutions for breach of the Corporations Law, observations made by the judges of the High Court are relevant in the sense that it is the same or similar as the Corporations Law which also applies to the applicant in these proceedings and which pervades the discharge of his duties to the respondents. To this extent, and for this reason, I refer briefly to some of the observations contained in those cases. 190 Chew was concerned with provisions of the Western Australian Companies Code. One such provision created an offence for an officer or employee of a corporation to "make improper use of his position as such….to gain directly or indirectly, an advantage for himself or for any other person or to cause detriment to the corporation." 191 In considering "improper" conduct and whether there had been "impropriety" Dawson J considered "the question of what constitutes improper use, on the one hand, of information acquired by an officer or employee of a corporation by virtue of his position and, on the other hand, of the position itself as an officer or employee of an corporation. It seems to me that an objective standard must be applied in determining what amounts to impropriety in either context. It is clear enough that a director of a company may act improperly with no intention of acting dishonestly or otherwise than in the best interests of the company as a whole. Whitehouse v. Carlton Hotel Pty. Ltd. [1987] HCA 11; (1987) 162 CLR 285 is an example where the allotment of shares by a governing director was thought by him to be in the best interests of the company but was held to be for the impermissible purpose of defeating the voting power of the existing shareholders. Where a director does something by the use of his position which is for an impermissible purpose it must, I think, amount to an improper use of that position, however much he believes his actions to be in the interests of the company See Jeffree v. NCSC (1990) WAR 183, at p 194. Notwithstanding that impropriety is to be determined objectively, it has been observed, correctly I think, by Jacobs J. in Grove v. Flavel (1986) 43 SASR 410, at pp 416-417 that what was improper for the purposes of the predecessor to s.229(3), s.124(2) of the uniform Companies Act 1961, 'cannot be determined by reference to some common, uniform, or inflexible standard which applies equally to every person who is an officer, but rather must be determined by reference to the particular duties and responsibilities of the particular officer whose conduct is impugned'. And it should also be said that, whilst impropriety is to be determined objectively, nevertheless the state of mind of the particular officer or employee may be relevant; for example, where a power may be exercised for permissible and impermissible purposes, the purpose for which it is actually exercised will clearly be relevant. ( See, e.g., Harlowe's Nominees Pty. Ltd. v. Woodside (Lakes Entrance) Oil Co. N.L [1968] HCA 37; (1968) 121 CLR 483; Whitehouse v. Carlton Hotel Pty. Ltd. (1987) 162 CLR, at p 294.)" (At 640 - 641) 192 These observations of Dawson J were approved in the joint judgment of Brennan, Deane, Toohey and Gaudron JJ in Byrnes. After considering his Honour's judgment and other authorities, their Honours said, "….Impropriety does not depend on an alleged offender's consciousness of impropriety. Impropriety consists in a breach of the standards of conduct that would be expected of a person in the position of the alleged offender by reasonable persons with knowledge of the duties, powers and authority of the position and the circumstances of the case. When impropriety is said to consist in an abuse of power, the state of mind of the alleged offender is important: the alleged offender's knowledge or means of knowledge of the circumstances in which the power is exercised and his purpose or intention in exercising the power are important factors in determining the question whether the power has been abused. But impropriety is not restricted to abuse of power. It may consist in the doing of an act which a director or officer knows or ought to know that he has no authority to do." (At 514 - 515. Footnotes references omitted.) 193 It follows that even though a director engages in conduct with intentions that are designed to assist a corporation, if the director, viewed objectively, has engaged in conduct that is inconsistent with the discharge of his or her duties according to law, the otherwise "good intentions" will be irrelevant. 194 As will be seen, these observations are relevant to one aspect of the applicant's case. He readily conceded that at all times he was engaged in a process euphemistically called "promotional activities" but which he candidly described as the payment of bribes. It was the applicant's case that this was the only basis upon which the respondents could gain overseas contracts and furthermore some other directors were aware of what he was doing and also participated in the same conduct. I shall deal more specifically with these matters later in these reasons for judgment. However, it is necessary to bear in mind that good intentions and motivation to assist a corporation will not excuse conduct that is otherwise in breach of a director's obligations. Furthermore, in making any necessary assessment about any such conduct, it is important to take into account the realities of the circumstances of both the respondents and the applicant. I shall return to this aspect also later in these reasons for judgment. 195 As I have observed, the conduct of the applicant was the subject of a statutory regime that, until 1 July 2001, was the Corporations Law (Commonwealth). 196 There are a number of provisions of the Corporations Law which impact directly upon the conduct of the applicant. They are contained within ss 180, 181 and 182 which are in the following terms. S 180 Care and diligence—civil obligation only Care and diligence—directors and other officers (1) A director or other officer of a corporation must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they: (a)were a director or officer of a corporation in the corporation's circumstances; and (b)occupied the office held by, and had the same responsibilities within the corporation as, the director or officer. Note: This subsection is a civil penalty provision (see section 1317E ). Business judgment rule (2)A director or other officer of a corporation who makes a business judgment is taken to meet the requirements of subsection (1), and their equivalent duties at common law and in equity, in respect of the judgment if they: (a) make the judgment in good faith for a proper purpose; and (b)do not have a material personal interest in the subject matter of the judgment; and (c)inform themselves about the subject matter of the judgment to the extent they reasonably believe to be appropriate; and (d)rationally believe that the judgment is in the best interests of the corporation. The director's or officer's belief that the judgment is in the best interests of the corporation is a rational one unless the belief is one that no reasonable person in their position would hold. Note: This subsection only operates in relation to duties under this section and their equivalent duties at common law or in equity (including the duty of care that arises under the common law principles governing liability for negligence)—it does not operate in relation to duties under any other provision of this Law or under any other laws. (3)In this section: business judgment means any decision to take or not take action in respect of a matter relevant to the business operations of the corporation. S 181 Good faith—civil obligations Good faith—directors and other officers (1)A director or other officer of a corporation must exercise their powers and discharge their duties: (a) in good faith in the best interests of the corporation; and (b) for a proper purpose. Note 1: This subsection is a civil penalty provision (see section 1317E ). Note 2: Section 187 deals with the situation of directors of wholly-owned subsidiaries. (2) A person who is involved in a contravention of subsection (1) contravenes this subsection. S 182 Use of position—civil obligations Use of position—directors, other officers and employees (1) director, secretary, other officer or employee of a corporation must not improperly use their position to: (a) gain an advantage for themselves or someone else; or (b) cause detriment to the corporation. Note: This subsection is a civil penalty provision (see section 1317E ). (2) A person who is involved in a contravention of subsection (1) contravenes this subsection. 197 Furthermore, there are provisions of the Corporations Law that impose obligations on the respondents as corporations. The applicant as a director and, for such period as he was chief executive officer, occupied a particular position which both enabled and required him to ensure compliance by the respondents with their obligations under the Corporations Law. His duties and obligations extended to the totality of the operations of the respondents in a general supervisory sense, although, of course, he was required to delegate the discharge of the duties and obligations of the respondents to responsible persons. Nevertheless, as the Chief Executive Officer and a director and, to some extent, as chairman of the Board, his ultimate authority on a day-to-day basis is a matter that must be taken into account. 198 I set out the provisions of ss 286, 297 and 301. S 286 Obligation to keep financial records (1) A company, registered scheme or disclosing entity must keep written financial records that: (a) correctly record and explain its transactions and financial position and performance; and (b) would enable true and fair financial statements to be prepared and audited. The obligation to keep financial records of transactions extends to transactions undertaken as trustee. Note: Section 9 defines financial records. Period for which records must be retained (2) The financial records must be retained for 7 years after the transactions covered by the records are completed. S 297 True and fair view The financial statements and notes for a financial year must give a true and fair view of: (a) the financial position and performance of the company, registered scheme or disclosing entity; and (b) if consolidated financial statements are required—the financial position and performance of the consolidated entity. This section does not affect the obligation under section 296 for a financial report to comply with accounting standards. S 301 Audit of annual financial report (1) A company, registered scheme or disclosing entity must have the financial report for a financial year audited in accordance with Division 3 and obtain an auditor's report. (2) A small proprietary company's financial report for a financial year does not have to be audited if: (a) the report is prepared in response to a direction under section 293; and (b) the direction did not ask for the financial report to be audited. 199 It will be seen in particular that by s 286 there is a requirement for the respondents to keep financial records which correctly record and explain their transactions and to enable "true and fair financial statements" to be both prepared and, importantly, audited. This is complemented by s 297, which requires that the financial statements give a true and fair view of the financial position and performance of the respondents. 200 In my opinion, a failure to ensure that the respondents complied with ss 286 and 297 of the Corporations Law would involve improper and inappropriate conduct on the part of a director as contemplated by ss 181 and 182 of the Corporations Law. I shall refer to these matters in more detail later in my reasons for judgment. Misconduct justifying summary dismissal 201 The relevant principles which apply in this area are the subject of a recent decision of the High Court of Australia in Concut Pty Ltd v Worrell [2000] HCA 64. The principles were summarised succinctly in the joint judgment of Gleeson CJ, Gaudron and Gummow JJ in the following terms. "[25] In Pearce v Foster , Lord Esher MR stated it to be a 'rule of law' that 'where a person has entered into the position of servant, if he does anything incompatible with the due or faithful discharge of his duty to his master, the latter has a right to dismiss him'. In Blyth Chemicals Ltd v Bushnell , in the course of considering the position of the respondent, who was the manager of the appellant's business, Starke and Evatt JJ said: 'As manager for the appellant, the respondent was in a confidential position. And it is clear that he might be dismissed without notice or compensation if he acted in a manner incompatible with the due and faithful performance of his duty, or inconsistent with the confidential relation between himself and the appellant.' In the same case, Dixon and McTiernan JJ said: 'Conduct which in respect of important matters is incompatible with the fulfilment of an employee's duty, or involves an opposition, or conflict between his interest and his duty to his employer, or impedes the faithful performance of his obligations, or is destructive of the necessary confidence between employer and employee, is a ground of dismissal.'" (Footnote references omitted.) 202 In the same proceedings, Kirby J said, "[51.4] It is, however, only in exceptional circumstances that an ordinary employer is entitled at common law to dismiss an employee summarily. Whatever the position may be in relation to isolated acts of negligence, incompetence or unsuitability, 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. 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. 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 like Mr Wells, 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." (Footnote references omitted.) 203 Importantly, also, the joint judgment of Gleeson CJ, Gaudron and Gummow JJ cited with approval the prior decision of the High Court of Australia in Shepherd v Felton Textiles of Australia Ltd (1931) 45 CLR 359. That case is authority for the proposition that an employer may justify the summary termination of a contract of employment on the basis of circumstances which existed prior to the termination occurring but of which the employer was unaware until after the termination. The respondents rely on such a principle in justifying the summary dismissal of the applicant notwithstanding that they did not rely upon those precise circumstances in determining to terminate the services of the applicant on a summary basis. The conduct/misconduct of the applicant 204 Having regard to the general principles to which I have referred, and having regard to the consideration of the position of the applicant as Chief Executive Officer for some period, a director throughout the whole of the period and a person with managerial responsibility for a particular part of the respondents' operations for part of the period, I now turn to consider the conduct of the applicant as revealed in the evidence and to assess whether, in the aggregate, the respondents acted unfairly in determining to summarily dismiss the applicant. 205 In doing so, I shall: a) apply what I understand to be community standard and values; b) consider, objectively, the conduct of the applicant in the context of his position, his roles and the circumstances of the respondents' business; c) the obligations imposed on the applicant at law and by reason of the Corporations Law . 206 In my opinion, the standards that the community expects of a director of a company are those which are contained within the relevant corporations legislation, and which have been recognised authoritatively within the common law. In considering the ultimate question for the purposes of these proceedings, namely whether there is any relevant unfairness as required by s 106, it is necessary to reflect community standards and, where appropriate, community values. The standard of conduct that the community expects of a director by reason of the statutory regime and common law principles to which I have referred compels, in my opinion, behaviour which is in all respects compliant with that regime and those principles. In fundamental terms, where a director seeks reimbursement of monies said to be expended on behalf of a company, it is incumbent upon the director to ensure that proper and appropriate records are available which will allow the company and its auditors to identify the expense as being one that is properly payable by the company. A failure to recognise this fundamental obligation constitutes a breach of a director's fiduciary duty and, where that director is an employee, a breach of the employee's duty to the employer. This fundamental principle compels the creation of a transparent and identifiable method of disclosure. It is not to the point that the subject matter of the disclosure may create some degree of sensitivity. I recognise that in matters involving commercial sensitivities, the protection of intellectual property and the commercial need to facilitate the gaining of business using particular techniques, there will often be a requirement to ensure a measure of confidentiality. Nevertheless, the fundamental principle requires the creation of some means of identifying the expenditure and the reasons therefor, even if undertaken in a manner that is appropriate to the particular circumstances. In making these comments, the Court should not be seen to be condoning the payment of bribes or the undertaking of any other activity of an illegal nature. I am referring, and should be taken only to be referring, to expenses that fall outside those which are in breach of any applicable law. The point is, however, that community standards, as reflected by the statutory regime and the common law principles, require a measure of disclosure. Of course, these observations are directed only to one aspect of the misconduct alleged against the applicant. 207 In reviewing the evidentiary material, I have made, from time to time, comment concerning the applicant's conduct. 208 In my opinion, the applicant misconducted himself in the manner in which he submitted his claims for travelling expenses. It is not to the point that he relied upon a methodology that he said he had used for many years. The fact is that in producing only copies of Diners Club vouchers, he failed to furnish information to the respondents and to their auditors that would have allowed ready identification of the dates during which the applicant actually stayed at the various hotels and other places of accommodation, the fact that it was the applicant who used the accommodation and whether that accommodation was used also by any other person, the fact that it was the applicant who utilised the transportation, particularly by air, the fact that the applicant had actually utilised taxis and other forms of transportation and the details of restaurants and other places used by the applicant for dining purposes. Furthermore, the production of hotel vouchers and the like would have enabled the respondents and their auditors to identify whether there was any expenditure of an unusual kind. As it transpired, it was only after investigations had been carried out by Mr Scott that it was discovered that there was charged to a hotel in London for air transportation, the details of which I have earlier referred to. I also reject the excuse proffered by the applicant that carrying hotel vouchers and the like was burdensome. He could always have asked the hotels to post his invoices back to him in Australia. 209 Not only was the applicant compelled as a matter of common sense and in discharge of his common law and statutory obligations to the respondents to provide such information and documentation, but his failure to do so is compounded because of the extensive nature of the travelling which he undertook and the large amount of expenses that he incurred. The failure of the applicant in many cases to describe the purpose of journeys undertaken by him falls within the same category. 210 I take the same approach with respect to the failure of the applicant to identify the promotional items, to whom they were paid and for what purpose and to identify, at least in some more general way, the purpose of larger payments made in cash to particular persons. 211 There is evidence of a discrepancy of $34,000 disclosed by the exchange rate calculations, which the applicant persisted in undertaking. I do not accept his explanation that this was a more convenient way of him keeping track of the appropriate exchange rate conversion that applied to his travelling and other expenses. There is no logical reason why the exchange rate conversion utilised by Diners Club, as disclosed on his monthly accounts, could not have been used by him. In acknowledging that there was a discrepancy and in persisting to use this methodology right to the very end, the applicant engaged in misconduct. 212 The payments made to Mr Leong, which I have earlier referred to in [62] and following, were not and could not have been made consistent with the written agreement that the applicant entered into with Mercury International. In personally authorising the payment, which was made, the applicant misconducted himself. Furthermore, the applicant did not at any stage justify any arbitrary increase in the amount of commission payable to Mercury International. 213 In establishing a bank account in Singapore over which the applicant had ultimate operational authority and in concealing this from the respondents, as referred to in [81] and following, the applicant misconducted himself. 214 The payment to Dr Caroline, referred to in [88] and following, constituted misconduct. 215 The gold bullion transaction, referred to in [93] and following, seems to have involved the applicant undertaking some "frolic of his own". The transaction, as the applicant conceded in evidence, was not associated with any of the ordinary trading activities of the respondents. The reasons given by the applicant are, in my opinion, of doubtful validity and, in entering into the transaction on behalf of the respondents, the applicant misconducted himself. 216 At [100] and following, I have set out the matters concerning Engineering General Consultants. In the aggregate, for the reasons that I have given, these matters establish misconduct by the applicant. Applicant's submissions with respect to misconduct 217 The applicant denied that he had engaged in misconduct which would justify summary dismissal. For reasons which I have given, it is plain that I reject any such submission. However, the applicant in submissions raised a number of other matters with which it is necessary to deal. a) It was said that what the applicant did in terms of promotional expenses and bribes was in the interests of the respondents as these were the only means by which the respondents could gain business in certain parts of the world. Such a submission might be relevant if the respondents relied solely on the payment of bribes and promotional expenses as justifying summary dismissal. However, this is not the case. What is relied upon by the respondents is the failure on the part of the applicant to create or implement some system that would enable the transactions to be reflected in some appropriate manner in the books of account and records of the respondents. There needed to be some transparency so that the respondents, through their personnel, would be able to validate the payment of those monies, and the projects with respect to which they were paid. The applicant appears to have gone about this aspect of his work in a clandestine fashion. He failed to make any, or, at the least, he made insufficient disclosure to his fellow directors of what he was doing. b) The applicant also submitted that there were others in the respondents' organisation who knew what was going on and that there was, presumably, general acceptance, condonation or connivance in these types of activities. The difficulty about any such submission is that it needs to be accompanied by some evidence. There was a suggestion in evidence that Mr Busbridge had boasted at a meeting in Indonesia of having bribed Indonesian generals. However, that evidence quickly fell away because it was clear that Mr Busbridge was not in Indonesia during any period when this conversation is said to have occurred. Mr Busbridge vehemently denied any involvement in and knowledge of activities of this kind. However, there is evidence given by Mr Hitt that there was a general awareness of promotional payments and promotional type activities, which were related to certain projects. These activities were left to the agents appointed by the respondents in the particular locations referrable to these projects. Apart from the evidence of this general kind, there was no other evidence that would justify the applicant's assertion. The evidence of Mr Hitt is equally capable of being accepted on the basis that the promotional activities were of a benign and acceptable kind. In the absence of any specific evidence to the contrary, I am unable to draw any inference favourable to the applicant's case concerning this evidence. Indeed, it is to be observed that much of the commercial world, and in particular in Australia, is centred around marketing and promotional activities. c) It was submitted on behalf of the applicant that the real motivation for the actions of the Board was a desire to bring about the departure of the applicant. There was evidence in the proceedings that the applicant had clashed with Mr Busbridge and Mr Scott concerning his conduct of the affairs of the respondents, particularly as Chief Executive Officer and with Mr Scott in particular concerning the manner in which the applicant claimed his travelling and other expenses. Furthermore, there was evidence of disquiet amongst senior managerial staff about the applicant's managerial style, the fact that the division that he was overseeing was making a substantial loss and the fact that the applicant seemed to spend most of his time out of the country during a period when the respondents were suffering something of a liquidity crisis. It was the evidence of Mr Busbridge that he had not made up his mind that the applicant's employment should, if at all possible, be terminated until the final decision of the Board taken at the meeting on 25 October 2001. Having regard to the evidence as a whole and the background to the actions taken by the audit committee and the Board, I do not accept the evidence of Mr Busbridge about this matter. I prefer the evidence of Mr Scott and others. Having regard to the totality of the evidence, it may be inferred that the applicant was unpopular with some of his fellow directors and did not enjoy the confidence of a large number of managerial staff. However, the drawing of such an inference does not, per se, lead to the conclusion that the processes undertaken by the respondents were flawed. For reasons which I have earlier expressed, the applicant was given every opportunity to be made aware of the matters that the audit committee and subsequently the Board wished to raise with him and to respond to those matters. In determining, for the reasons which I have expressed and on the basis which I have applied, that viewed objectively the Board was justified in summarily terminating the applicant's employment, whether and to what extent any one or more members of the Board may have had an underlying desire to see the end of the applicant's involvement in the respondents is, in my opinion, irrelevant unless it can be demonstrated that no such decision would otherwise have been made. That qualification cannot, in my opinion, be made out. d) The applicant complained that the audit committee initially and the Board subsequently had demanded of him that he produce documentation which was no longer in his possession or alternatively not accessible to him, that documentation being many years old. It was said that he should not be punished for his failure to present that documentation. There are a number of responses to this submission. Firstly, the evidence is that in 1999 the applicant submitted a bundle of claims dating back to 1993. Furthermore, it was the applicant who chose and insisted upon using the methodology that he did. In doing so, he breached his obligations to the respondents, both as an employee and as a director. If he had kept the documentation, which as a matter of law he was compelled to keep (and indeed submit to the respondents), then such failure must be borne by him in terms of his inability to produce the documents when finally compelled to do so. Also, it is not just the lack of documentation that is significant. The evidentiary material to which I have referred exposes a number of areas of misconduct that are not confined only to the failure to keep appropriate records. They extend to the opening of false bank accounts, the authorisation of the payment of commissions and the like without any valid reason and certainly without authority and the entry into transactions such as the gold bullion transaction, which, on all accounts, cannot be justified in any circumstances. Each of these matters individually and, certainly in the aggregate, constitutes misconduct justifying summary termination of employment. It follows that this submission is rejected. e) It was submitted on behalf of the applicant that some of the payments, which he had made, had been the subject of endorsement by the former managing director, Mr Barry Ireland, in May 1992. The applicant gave affidavit evidence about the particular transaction, which was said to be the subject of this endorsement. He said that SMEC had been pursuing the Lahore-Islamabad Motorway Project ("LIMP") for many years. I observe that all of these matters occurred prior to the acquisition of the business by the current respondents. The applicant said that in January 1992, as a result of a communication from Mr ul Haq of Engineering General Consultants, the then SMEC agent in Pakistan, he flew to Islamabad and met a person to whom he was introduced by Mr ul Haq. The applicant was told that if the company wanted to win the project, it would be required to make payments to certain people. The applicant said that he agreed to this and that a letter was to be forwarded to him once he had returned to Australia. Upon return to Australia, he said he had a conversation with Mr Ireland and told him that a letter of intent was to be sent but that there was a need to make some payments to people in Pakistan to get the job. The applicant said, "As best I can recall, he (Mr Ireland) did not reply, but nodded to acknowledge what I had said." Shortly thereafter, a letter of intent arrived and the applicant returned to Pakistan to negotiate the contract. A payment of about PKR27 million was discussed and, after negotiations, the billing rate to be charged on the project was increased to cover the cost of those payments. On 5 April 1992, Engineering General Consultants issued an invoice in the amount PKR27.5 million for "management, promotional and mobilisation expenses." The invoice stated "payment to be made in rupee foreign exchange certificates." The applicant said that the additional payment was to cover bank charges and currency exchange costs. The applicant then attended in Pakistan and arranged for the payment to be made from a bank account operated by the then company in Islamabad. The applicant said that on 28 May 1992, he had a telephone conversation with Mr Ireland and discussed with him what had been arranged, giving him the names of the people who were to receive payment on a confidential basis. He alleged that Mr Ireland told him that, "The decision in principle to make these payments was made years ago before you or I were in management positions and were effectively made once SMEC decided to engage in this type of business overseas. We are only carrying out existing policy." The applicant then arranged for an internal invoice to be raised so as to secure payment of the monies to Engineering General Consultants in Pakistan. This is the only evidence of the particular involvement of any other person in the various activities undertaken by the applicant. Taking this evidence at its highest in favour of the applicant, it demonstrates condonation by the then managing director of the then company of that activity. However, the activity was undertaken not by the respondents but by the company that operated the business prior to it being acquired by the respondents. Furthermore, the evidence of the applicant indicates that it was he personally who agreed to the payment of bribes to secure the project and it was he personally who was intimately involved in the negotiation of the process. There is no suggestion in the evidence of the applicant that he involved anyone else in the decision making process and the involvement of the managing director was undertaken merely by way of acquiescence of a transaction initiated by the applicant. It seems the applicant was the instigator of what later occurred. There is no evidence that would link Mr Ireland with the respondents to these proceedings. Accordingly, the evidence is not indicative of any acquiescence by any particular person in or the condonation by any particular person of the conduct of the applicant in agreeing to the payment of bribes undertaken on behalf of any person associated with the respondents. Furthermore, the evidence is, as I have said, indicative of the willingness and desire of the applicant personally to become involved in transactions of this kind. 218 I do not regard any of these submissions as affecting the conclusions that I have earlier reached concerning the misconduct of the applicant and the justification on the part of the respondents in summarily terminating his employment. 219 For the reasons that I have earlier set out, the applicant has failed to make out any of the grounds of unfairness that he has asserted against the respondents either within the amended summons or in the course of submissions. Furthermore, for the reasons that I have given, I have concluded that the respondents were justified in summarily dismissing the applicant from employment having regard to the response that he gave to the Board letter dated 30 August 2001. In these circumstances, the applicant's claims against the respondents must be dismissed. 220 The parties specifically agreed that costs should be reserved and I shall do so. Orders 1) The summons is dismissed. 2) Costs are reserved. 3) Liberty to apply with respect to costs. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.