Industrial Court of New South Wales CITATION: Windrum & Anor v Matrix Healthcare Pty Ltd tas Combined Pathology & Anor (No 2) [2007] NSWIRComm 310 FIRST APPLICANT Graham Windrum SECOND APPLICANT Monkerai Pathology Services Pty Ltd PARTIES: FIRST RESPONDENT Matrix Healthcare Pty Ltd t/as Combined Pathology SECOND RESPONDENT Peter John Court FILE NUMBER(S): IRC 2739 of 2005 CORAM: Staff J CATCHWORDS: Unfair contract - Section 106 proceedings - Summary dismissal - Whether contract varied by consent - Whether applicant's conduct justified summary termination - Held consent variation to contract - Misconduct justifying summary termination - Procedural deficiency - Exercise of discretion refused - Summons dismissed - Costs LEGISLATION CITED: Industrial Relations Act 1996 Abboud v The State of New South Wales (Department of School Education) (1999) 92 IR 32 CASES CITED: Concut Pty Ltd v Worrell (2000) 103 IR 160 Schwartz v Central Sydney Area Health Service & Anor [2002] NSWIRComm 79 HEARING DATES: 29 October 2007, 30 October 2007, 31 October 2007, 1 November 2007, 2 November 2007 and 5 November 2007 DATE OF JUDGMENT: 14 December 2007 APPLICANTS Mr P Coleman of counsel Solicitor: Mr S Chapman TressCox Lawyers LEGAL REPRESENTATIVES: RESPONDENTS Mr M J Kimber SC with Mr A Connolly of counsel Solicitor: Mr M Trisley Trisleys JUDGMENT: - 1 - INDUSTRIAL COURT OF NEW SOUTH WALES CORAM: STAFF J 14 December 2007 Matter No IRC 2739 of 2005 GRAHAM WINDRUM & ANOR v MATRIX HEALTHCARE PTY LTD t/as COMBINED PATHOLOGY & ANOR (NO 2) Application under s 106 of the Industrial Relations Act 1996 JUDGMENT [2007] NSWIRComm 310 Introduction 1 On 1 July 2001, Dr Graham Windrum, at the age of 74, commenced providing pathology services as an independent contractor to Matrix Healthcare Pty Ltd t/as Combined Pathology ("Matrix"). These services were subsequently provided from about January 2004 through Monkerai Pathology Services Pty Ltd ("Monkerai"), a company established by Dr Windrum at the request of Peter Court, a director and secretary of Matrix ("the second respondent"), so that Dr Windrum could provide his services through that company. 2 On 16 May 2005, at 5.35 am, Dr Windrum's contract with Matrix was terminated "primarily due to gross neglect of duty and a severe breach of confidentiality". Dr Windrum denies any wrongdoing and says the summary termination was manufactured to get rid of him because he did not accept, in February 2005, changes proposed to his contract. At the time of his termination in May 2005, Dr Windrum, through Monkerai, was earning approximately $752,194 per annum from his contract with Matrix, working Monday to Saturday each week. The Summons 3 By their summons, Dr Windrum and Monkerai sought an order under s 106 of the Industrial Relations Act 1996 ("the Act") declaring void in whole or in part, from an appropriate date, the contract made on or around January 2001 and arrangements, whereby Dr Windrum and Monkerai performed work for Matrix. An order was also sought that Matrix and Mr Court, jointly and severally, pay Dr Windrum and Monkerai a sum representing 12 months remuneration under the contract. 4 In the alternative, an order to vary the contract, from a time prior to its termination, between Dr Windrum and Monkerai and Matrix was sought as follows: 3. In the alternative an order to vary the contract, from a time prior to its termination, between the applicants and the first respondent. (a) To provide that should the respondents terminate the contract for any reason they will provide 12 months notice of termination in lieu of such notice. (b) To provide that the respondents will not discriminate against the first applicant because of his age and will not terminate the contract because of the age of the first applicant or for reasons associated with the age of the first applicant. (c) To provide that the respondents will consult with the applicants if termination is contemplated and before any decision is made. (d) To provide that the contract will not be terminated without proper and fair reason. (e) To provide that the contract will not be terminated unfairly. Should the respondents have any genuine concerns about the conduct or performance of the applicants under the contract it will put such concerns to the applicants and provide substantive and procedural fairness. General Background 5 Dr Windrum was the only witness for the applicants and with some very minor exceptions, disputed the evidence called by the respondents, which consisted of six witnesses. Dr Windrum swore four affidavits, on which he was cross-examined, for a little over two days. The second respondent, Mr Court, swore an affidavit and was cross-examined. The respondents called in support Dr Simon Clark, a Pathologist currently employed by Matrix; Ms Suzanne Pohlner, former General Manager of Matrix; Mrs Lynne Townsend, former Office Manager of Matrix, who now holds a position of IT Manager with Matrix; Ms Patricia Hagan, the Manager of Matrix between April 2002 and April 2003 and Ms Linda Harris, the Laboratory Manager at Matrix until June this year. All the deponents were cross-examined. 6 I prefer, particularly for the reasons set out at [95], the evidence of the respondent's witnesses, to that of Dr Windrum in respect of any issue in dispute. 7 It was common ground that Dr Windrum is a very experienced Pathologist and that during his time with Matrix, there was a severe shortage of Pathologists in Australia. 8 Dr Windrum says that in or around January 2001, he commenced working as a Pathologist for a company known as E-Path. Dr Ian Katz was the Proprietor of E-Path, which provided pathology services to Matrix. 9 On or around June 2001, Dr Windrum had discussions with Mr Court regarding the number of cases and days he was working and his remuneration. On 1 July 2001, Dr Windrum began providing pathology services, as an independent contractor, directly to Matrix in accordance with an agreement reached with Matrix. Dr Windrum says that the agreement was that Matrix would pay him $1,500 per day on the basis that he would do a minimum of 70 cases per day. At the time, Dr Windrum says he was doing closer to 80 - 90 cases per day. His evidence is that Mr Court agreed with this proposal. Mr Court's evidence was that he required Dr Windrum to deal with a minimum of 100 cases per day to generate an entitlement to his daily fee of $1,500, which was increased to $2,000 per day in October 2003. However, in a subsequent affidavit, Dr Windrum says he was only required to complete an "average" 100 cases per day, which formalised an arrangement, which had already been in place. This is disputed by Mr Court. 10 In late 2001, early 2002, a number of Pathologists working for Matrix resigned or reduced their hours, leaving Dr Windrum as the only fulltime Pathologist. This led to Dr Windrum acting in the role of Supervising Pathologist. By June 2002, Dr Windrum was doing more than half of Matrix's total caseload. Pathology was also carried out by Drs Krausz, Cortis- Jones and Katz during the period Dr Windrum was engaged. 11 In September 2002, Dr Windrum met with Mr Court to review the terms of his agreement with Matrix. In a letter dated 29 September 2003, Dr Windrum proposed a payment of $2,250 per day, together with $1 per case from 1 October 2002, until 30 September 2003. 12 An agreement was reached whereby Dr Windrum would be paid $1,750 per day, together with an additional fee of $50,000 per annum for acting as the Supervising Pathologist. A deed of agreement made on 1 October 2002, was executed to reflect the payment in respect of undertaking the role of Supervising Pathologist. 13 In January 2003, Dr Windrum suffered a heart attack and was absent from Matrix for approximately three weeks. On 29 September 2003, Dr Windrum wrote to Mr Court seeking a review of his agreement. Dr Windrum sought the payment of $2,250 per day, together with $1 per case from 1 October 2003. In addition, he sought the payment of his medical indemnity premiums and the provision of a home computer. An agreement was reached to pay Dr Windrum $2,000 per day, together with $1 for every case he supervised, the provision of a home computer and the payment of his medical indemnity premiums. It was at this time Mr Court suggested that Dr Windrum form a company and provide his services through that company. 14 In January 2004, Monkerai Pathology Services (Dr Windrum's company) began providing pathology services to Matrix. 15 On 21 September 2004, Dr Windrum again wrote to Mr Court seeking a review of his remuneration agreement, suggesting a 15 per cent increase, which was not agreed to in light of Dr Windrum seeking to reduce his hours. 16 On or about June 2004, the respondents contend Dr Windrum advised a number of employees that he wanted to slow down and work less days per week. This is denied by Dr Windrum. This is an important issue in this case, to which I will need to return in some detail. For the moment, it is sufficient to say that they culminated in an arrangement where, after three months notice, Dr Windrum's workload was to be reduced to 250 cases per week and he would no longer hold the position of Supervising Pathologist. Dr Windrum's case is that the termination of his appointment as Supervising Pathologist and the reduction in his caseload were not discussed with him at all. Nor were there any negotiations. 17 On 16 May 2005, Dr Windrum arrived at Matrix at approximately 5.35 am. He was met by a security guard who handed him a letter stating that his contract was terminated immediately for reasons of neglect of duty, breach of confidentiality and overcharging. Dr Windrum received no payment in respect of notice, or any other termination payment. 18 On 1 August 2005, Dr Windrum accepted a position as a contracting Pathologist with Mayne Health. Interestingly, this contract provides in cl 7, Termination, that Dr Windrum may terminate the agreement at any time by providing three months notice to the company. Issues 19 Mr P Coleman of counsel, who appeared for Dr Windrum submitted that there were two major issues to be determined in this case. First, did Dr Windrum engage in conduct which would justify summary termination, without notice? Mr Coleman conceded that although not finally determinative of a claim for notice under s 106 of the Act, if there was justification for summary termination at common law, then that would impact upon the fairness question in relation to the failure to provide notice. Counsel observed, however, that a failure to provide procedural and substantive unfairness and to have a sound reason for termination, created additional unfairness at termination. In my opinion, for the reasons which I state later, I have reached the conclusion that the applicant did engage in conduct warranting summary dismissal. 20 The second issue raised by Mr Coleman is did Dr Windrum ask to have a replacement found and express an intention to stand aside from his role as Supervising Pathologist in 2004. In my opinion, this question should be answered in the affirmative. The result is therefore that the application should be dismissed. 21 It is more convenient to commence by dealing with the second issue as it enables the circumstances which led to Dr Windrum's termination to be seen in its proper perspective. Did Dr Windrum consent to a variation to his Contract? 22 The respondents' case is that in recruiting a replacement supervising pathologist for Dr Windrum and reducing his hours, it was simply fulfilling Dr Windrum's requests, which amounted to a consent variation to the contract. The applicants submit that there is no evidence of any agreement in respect of a variation to the contract. 23 In January 2003, Dr Windrum had a heart attack. At this time, he was 76 years of age. The evidence is that over the next 18 months he started to inform employees of Matrix that he desired to reduce his working hours and "slow down". He readily accepted that if Matrix was prepared to accommodate him in this regard, that he could no longer be its supervising pathologist. I can readily understand, taking into account, Dr Windrum's age and his health, that this would have been an unsurprising decision. 24 The evidence leading to what I find to be a consent variation to Dr Windrum's contract was that on or about early June 2004, Ms Pohlner (the former General Manager) had a conversation with Dr Windrum. Her affidavit evidence was: Dr Windrum: I am at a point where I want to start slowing down. I want to reduce my workload and I would like to do so by Christmas. I thought it best to tell you this now so that you can get another pathologist, and because there will be a number of the staff away at Christmas for which I will not be able to cover. Ms Pohlner: Thank you for telling me this. I will inform Peter. You obviously appreciate how difficult it is to recruit doctors suitably qualified to be a supervising pathologist. You do realise that if you reduce your work hours you will no longer be able to fulfil the role of supervising pathologist, don't you? Dr Windrum Of course I do, I am willing to assist you in recruiting another pathologist. I know a lot of people in the industry and I have somebody in mind already. Ms Pohlner: That's great. I will start making arrangements. 25 Ms Pohlner immediately informed Mr Court of this conversation and he instructed her to attend to recruiting another pathologist in light of what Dr Windrum had said. On or about early to mid June 2004, Dr Windrum and Ms Pohlner met with Mr Chris Wallace from Wavelength Consulting to discuss the possibility of sourcing another pathologist to take over from Dr Windrum and to cover the Christmas period. Due to the difficulties faced recruiting suitably qualified pathologists to fulfil the role of supervising pathologist, Mr Wallace's advice was sought on recruiting a pathologist from overseas. Ms Pohlner continued to liaise in written correspondence following the meeting with Mr Wallace. She annexed a copy of her letter to Mr Wallace dated 17 July 2004. The minutes of a management meeting of the respondent held on 2 July 2007 and attended by Ms Pohlner, Ms Harris, Mrs Townsend and Dr Windrum record that Ms Pohlner advised investigations have been ongoing into the possibility of employing another pathologist and that Dr Windrum and herself had had a meeting with an external consultant regarding the possibility of recruiting a pathologist from overseas. 26 On 9 July 2004, Mr Wallace forwarded an email to Ms Pohlner advising that he had had a chat with the Australian Salaried Medical Officers' Federation about salaries. He set out the salaries for a first year pathologist and a pathologist with seven years experience. 27 On 18 September 2004, Ms Pohlner placed an advertisement in the Sydney Morning Herald seeking a pathologist. Only three replies were received. All applicants were overseas trained doctors with minimum experience and did not meet their requirements. Ms Pohlner discussed this problem with Dr Windrum. The minutes of the management meeting of 24 September 2004 record that Ms Pohlner and Dr Windrum had a meeting with external consultants regarding the possibility of employing a pathologist from another country. The minutes also record that an advertisement was placed in the Sydney Morning Herald to which three replies were received, but none were suitable. 28 On or about 21 September 2004, Mr Court forwarded Ms Pohlner a copy of a letter he had received from Dr Windrum of the same date. In this letter, Dr Windrum advised that his remuneration review was due at the end of September 2004. He set out some figures comparing the first eight calendar months of 2003 and 2004, which showed an 11 per cent increase in patients from 32,639 in 2003 to 35,637 in 2004. Dr Windrum proposed that as his workload had increased from 19,025 patients to 25,068, an increase in workload of 32 per cent for the previous eight months. He proposed that a 15 per cent increase in remuneration was warranted. 29 Ms Pohlner's evidence was that she was shocked at the contents of the letter following the events of June and July 2004, particularly her attempts to recruit a pathologist to succeed Dr Windrum. Mr Court instructed Ms Pohlner to arrange a meeting with Dr Windrum to discuss the contents of the letter. A meeting occurred on 14 October 2004. Mr Court and Ms Pohlner's recollection of what occurred at this meeting is in conflict with that of Dr Windrum. 30 Dr Windrum's evidence is that Ms Pohlner said to him: "We want you to begin working a set number of days each week", to which he responded as the supervising pathologist he had to be available on a fulltime basis. Dr Windrum's evidence is that Mr Court then said "We will continue on as we have been. We will pay you $20 per case plus $1 for every case you supervise. We are currently trying to build up the business with a view to selling it. Do you still intend to continue working to the age of 80? We need to know so we can make plans to build up the business." 31 Dr Windrum says that he responded to Mr Court by saying that he intended to continue with his current workload until he turned 80 and that if they wanted to build up the business then they might want to consider finding another pathologist to cope with any increased workload. 32 Ms Pohlner's evidence of her recollection of the meeting was that she advised Dr Windrum that Matrix had been looking for a few months to recruit someone to take over as supervising pathologist because he had advised Matrix that he wanted to "slow down". She observed that he had been assisting her and that he now wanted a fee increase based on an increased workload. She observed that this did not make sense. 33 Ms Pohlner says that Dr Windrum confirmed that he wanted to slow down but he wanted to be paid appropriately. He observed that it was now October and Matrix had not been able to engage another pathologist. Ms Pohlner advised Dr Windrum that she would continue to recruit another pathologist but it was not easy, to which Dr Windrum replied: "I don't really care about your problems." If Matrix was not prepared to pay him appropriately, he said he may just have to take leave over Christmas like the other pathologists and then see how they coped. 34 In November 2004, Ms Pohlner says Dr Windrum complained to her that not enough was being done to recruit a new pathologist to cover the Christmas period and relieve his workload. She says that she told Dr Windrum she was trying hard to get somebody suitable and that he knew how hard it was to find a suitable pathologist. Dr Windrum denies this conversation. 35 In late 2004, Dr Windrum says that he advised Ms Pohlner that she should contact a colleague of his, Dr Chris Douglas, to cover the Christmas period. Ms Pohlner agrees that this discussion took place. 36 The minutes of the management meeting of 7 December 2004 record that Ms Pohlner and Mr Court had approached Dr Douglas. However, if he was engaged it would have meant that slides would have had to be sent off-site. Dr Windrum and Messrs Harris and Townsend all expressed the view that this had not worked on a previous occasion. The minutes also record that discussion then took place in respect of approaching Dr Simon Clark to cover the Christmas period. 37 In December 2004, Matrix engaged the services of Dr Simon Clark as a locum to cover the Christmas period, with a view to contracting him on a full-time basis as supervising pathologist so that Dr Windrum could reduce his workload. 38 Mr Court contacted Dr Windrum and advised him that Dr Clark had been engaged to cover the Christmas period and to take over the supervising pathologist's position to enable him to reduce his workload. Mr Court said he informed Dr Windrum that he could "relax about it all now". Dr Windrum denies this conversation. Mr Court's evidence is that when he advised Dr Windrum of Dr Clark's engagement, Dr Windrum said: "That's no good. The last time he was here, there was a lot of complaints and he did not do the job properly. We don't need him anyway, I can handle the workload over the Christmas period." 39 This conversation, apart from the reference to complaints is also denied by Dr Windrum. Mr Court says that he responded to Dr Windrum by advising him that only one minor issue with Dr Clark was ever brought to his attention by any staff member or by Dr Windrum when Dr Clark last worked for Matrix. This is denied by Dr Windrum. Mr Court also advised Dr Windrum that he had spoken to Ms Pohlner and they were both satisfied that Dr Clark was more than qualified to do the work. Mr Court's evidence is that he then said to Dr Windrum: "The reason we got him is because you have been on my back for months to get someone to cover the Christmas period." This is denied by Dr Windrum. Mr Court then advised Dr Windrum that he was not cancelling Dr Clark's contract now and that Dr Windrum couldn't change his mind like that. 40 Mr Court then spoke to Ms Pohlner and asked whether any complaints were recorded against Dr Clark when he had previously worked with Matrix. This conversation is confirmed by Ms Pohlner who says that she informed Mr Court that she did not recall any, but that she would check and get back to him. Ms Pohlner's evidence is that she checked the records held by Matrix and could not find any complaint/s recorded against Dr Clark. She thought that Mr Court may have an issue in respect of Dr Clark's credentials and so she contacted Dr Clark's previous employer, Ms Margaret Stewart, the ex Chief Executive Officer of the Skin and Cancer Foundation, to obtain a verbal character reference for Dr Clark. She said Ms Stewart praised Dr Clark's character and professional performance. Ms Pohlner then passed this information on to Mr Court who told Mrs Pohlner to engage Dr Clark. 41 Dr Windrum then drove to Newcastle where both Mr Court and Ms Pohlner worked to further discuss his concerns with the recruitment of Dr Clark. At this meeting with Mr Court and Ms Pohlner, Dr Windrum said he did not know why Matrix would employ Dr Clark because there had been so many complaints after his last locum and Mr Court had said that he would never be employed again. He advised both of them that a Dr Fisher would now be available to work over the Christmas period as a locum. Ms Pohlner says that she was contacted by Dr Windrum on a number of occasions after he was advised that Dr Clark had been engaged as the locum. During these conversations, Ms Pohlner said Dr Windrum maintained his view that Dr Clark was not capable of doing the job and that there were complaints made about him. Dr Windrum continued to assert that he could cope with the extra workload and did not need any assistance. 42 Ms Pohlner's evidence is that she said to Dr Windrum that he was "back peddling" and had been hounding her for months to make sure she recruited someone before Christmas so he could reduce his workload. Dr Windrum does not recall this conversation. Dr Windrum agreed that he had said to Ms Pohlner that Dr Clark was not suitable but he denied saying he did not want to work with him. Mr Court's recollection of what occurred at the meeting in Newcastle is consistent with Ms Pohlner's recollection and I accept both their evidence in respect of what occurred at this meeting in preference to Dr Windrum's recollection. 43 In December 2004, Dr Windrum says that he contacted Dr Clark after the decision was made to engage him, and invited him to the laboratory to introduce him to the staff and to familiarise himself with Matrix's new procedures. 44 On 23 February 2005, Mr Court instructed Ms Pohlner to call a meeting of all staff at Matrix to inform them of the appointment of Dr Clark as the supervising pathologist and of the reduction in Dr Windrum's caseload. Dr Windrum attended this meeting. Prior to it, a meeting occurred between Dr Windrum, Mr Court and Ms Pohlner to discuss how the succession of Dr Windrum could be arranged to best suit all parties. At this meeting, Dr Windrum's evidence is that Ms Pohlner said: "Matrix wants to expand its business and as part of this process is taking on another pathologist, Dr Clark. Your workload will be reduced and Dr Clark will take over that workload. Dr Clark will also replace you as a supervising pathologist." Dr Windrum says that he asked why he was being replaced as supervising pathologist and what he had done and was advised by Mr Court that he would not be with Matrix forever and it had to make alternative plans. Dr Windrum says that Mr Court also said that they would have to replace him at some point and that pathologists were not easy to come by. Both Mr Court and Ms Pohlner dispute Dr Windrum's version of what occurred at these meetings. Mr Court's evidence is that he advised Dr Windrum that it would be necessary to discuss how Matrix would go about introducing Dr Clark as supervising pathologist and also reducing Dr Windrum's caseload. 45 Mr Court thought that it was best to involve Dr Windrum in these discussions so that the transition was as smooth as possible. Dr Windrum denies that this occurred. Mr Court's evidence is that Dr Windrum responded by saying that he did not want Dr Clark replacing him and that another pathologist was not needed. He would rather do everything himself rather than have Dr Clark in the laboratory. This aspect of the conversation is denied by Dr Windrum. 46 Mr Court's evidence is that he said: "You told us that you wanted to work two or three days per week to reduce your workload. We told you and you agreed that it was necessary to appoint another supervising pathologist to allow you to do that because you will not be with us forever. You will have to leave us sooner or later, and we have to plan for this. You have known about this for six months and even assisted us in sourcing your successor. Now you are telling me that you do not want to reduce your workload and relinquish the supervising pathologist's role. It's too late Graham, we have already contracted with Dr Clark. You have go nobody to blame but yourself. We have tried to do everything right by you, even when you try to hold us to ransom. This decision was made by you some time ago and it's going ahead now." 47 Dr Windrum did not recall the first part of this conversation and denied the latter part of it. 48 Mr Court's evidence is that Dr Windrum responded by saying: "You can't do this to me because I'm old." Dr Windrum contends that he said to Dr Court: "I believe you are doing this because I am old." This is the only evidence in respect of Dr Windrum's age. It does not enable a finding to be made that the respondent discriminated against Dr Windrum because of his age. This issue did not appear to be seriously pressed by the applicants. Mr Court said to Dr Windrum that this had nothing to do with his age and it is what he had wanted for the past six months. He informed Dr Windrum that his new work plan would be effective from 23 May 2005. From that date, he would not be the supervising Pathologist and he would not be receiving an extra dollar for every case done by Matrix from that date. In addition, Mr Court advised Dr Windrum that Matrix would continue to pay him $20 for each case that he did, providing that he completed 250 cases per week. Dr Windrum accepts that Mr Court told him of the new arrangement but denies this is what he wanted. Ms Pohlner's evidence of what occurred at the meeting is consistent with that of Mr Court. I prefer the evidence of Mr Court and Ms Pohlner. The evidence of Dr Windrum that a business would take on an additional pathologist in the expectation of increasing their business is commercially fanciful. 49 On 24 February 2005, Ms Pohlner, on the instructions of Mr Court, forwarded a letter to Dr Windrum confirming the new arrangements. This letter was in the following terms: As discussed with Peter Court yesterday, your workload will be reduced to around 250 cases per week effective 23/5/05. Until that date your position with Combined Pathology remains unchanged and, as Supervising Pathologist, you are expected to ensure that accurate results are available for reporting in a timely manner, oversee the work of the other pathologists in the laboratory and provide continuing education for scientific staff, medical practitioners and fellow pathologists who are employed or contracted by Matrix Healthcare. It is our hope that you will continue to work with Combined Pathology in a less demanding role after the 23/5/05. We greatly appreciate your substantial contribution to the laboratory's success over the past few years and look forward to continuing the relationship. Whether or not this is possible is entirely up to you. We are prepared to be flexible with your working hours so that you can report all your cases on one or two days if that is a preferable arrangement. Your remuneration will remain at $20.00 per case after 23/5/05 but you will not be paid the extra $1.00 per case you received as Supervising Pathologist. We also expect that whilst you continue to be contracted by Matrix Healthcare your standard of conduct will at all times be in accordance with the highest ethical, moral and legal standards with respect to all dealings involving pathologists and staff of Combined Pathology, medical practitioners, staff and patients of the Australian Skin Cancer Clinics (or any other referring clinics) and with Matrix. Any attempt by you to solicit, interfere with or endeavour to entice away from Matrix any person who is an employee, contractor, patient or referring doctor of Matrix Healthcare, will be deemed a breach of contract and your contract will be terminated immediately. 50 Ms Pohlner states that after sending this letter to Dr Windrum, she received numerous complaints and concerns from staff at Matrix. Although she could not recall specifically who brought these complaints and concerns to her attention, her evidence was that the majority of the complaints were raised by Mrs Townsend and Ms Harris. These complaints were that Dr Windrum was regularly making sexist and offensive remarks to staff; that Dr Windrum was complaining to staff at the laboratory and unrelated parties visiting the laboratory that he had been "fired" by Matrix, thereby causing embarrassment to other staff members; that Dr Windrum was always criticising and acting in a derogatory manner towards Ms Pohlner and other Matrix management openly in front of staff at the laboratory; that Dr Windrum was leaving early and being unavailable for consultation when needed; that Dr Windrum was putting pressure on staff to start work early to fit in with his desired working hours and that Dr Windrum was failing to diligently report specimens and check reports properly prior to verification. 51 Many of these complaints are verified in a document prepared by Mrs Townsend, referred to later in these reasons titled "Feedback on Graham Windrum" which was prepared on or about early April 2005. On 7 March 2005, Ms Pohlner, after orally raising concerns about Dr Windrum with Mr Court, forwarded a letter to Mr Court setting out her own complaints regarding Dr Windrum's behaviour. The letter was as follows: I am writing to complain about the manner in which I have been treated by Dr Graham Windrum since my appointment as General Manager in February 2004. From the beginning Graham has sought to undermine my authority with the senior staff members of Combined Pathology, although he was usually pleasant to me in person. His lack of respect for me and my position initially made it difficult for me to build effective relationships with Linda and Lynne Townsend. At the time I was confused about their negative attitude towards me, but as I gained their confidence they revealed that Graham had tried to turn them against me. It was after you spoke to Graham in February regarding the changes to his case load that Graham revealed his true colours to me. He asked to speak to me privately and proceeded to call me a cheat and a liar. He suggested that I had schemed to turn the directors against him and was bringing Simon Clark on board purely to save money. His attack was very personal and he was not prepared to listen to anything I had to say in my own defense. I was very hurt by what he said, particularly his accusations that I was lying and had finally got what I wanted, which was to get rid of him, as this is completely untrue. I have always treated Graham with the utmost respect and have always been honest and transparent in my dealings with him. To learn from colleagues that he has been very derogatory, defamatory and sexist in his discussions about me is harmful and distressing. This, and his attempts to discredit me by telling you (and no doubt others) that I was sacked by Gribbles Pathology (a blatant lie), has made it very difficult for me to interact with Graham in any effective way. I have continued to be civil and polite but he has totally ignored me in recent meetings. Graham's attitude towards me is making it impossible for me to function properly as General Manager at Combined Pathology. His complete lack of respect and open hostility towards me is creating disharmony in the laboratory We cannot continue to work like this and expect the business to move forward. 52 Mr Court's evidence is that the terms proposed in the letter of 24 February 2005 were in accordance with Dr Windrum's requests. Mr Court's evidence is that throughout 2004, and prior to receiving the letter from Ms Pohlner dated 7 March 2005, he had cause to contact Dr Windrum on a number of occasions to discuss the problems that other staff had with his behaviour and his performance. His evidence was that he informed Dr Windrum that he had been receiving complaints from a number of staff, all raising the same concerns. Dr Windrum's response was that the staff were teaming up to get him out and they were liars. Dr Windrum asked Mr Court if he trusted him and his evidence is that he said: "I trust you Graham, however I trust them as well. The point is that this quite a regular occurrence. They are complaining that you are racist towards other staff members, that you make sexist and offensive comments around female staff to the point where they cry, that you openly complain about Suzanne and myself, that you undermine the reputations of the other pathologists so as to make yourself look superior, and that you blame everybody else for the mistakes you make. This is damaging staff morale and driving them away. What also concerns me is that you are arriving to the lab extremely early and leaving it unsupervised when you leave by lunch time. This is driving the staff made because they often have to get to the lab before 5 am, and means that you are not fulfilling your role as Supervising Pathologist. You know what is expected of you, you have the Statement of Duties and the NPAAC requirements. I must warn you that this can not continue. This is an official warning. If you continue to behave inappropriately and fail to fulfil your duties we will have to terminate the contract." 53 Dr Windrum rejects that any of these matters were ever raised with him by Mr Court. I prefer the evidence of Mr Court on this issue. 54 Mr Court said that he attempted to balance the complaints the staff had regarding Dr Windrum with the need to have the Matrix laboratory operating efficiently and co-operatively. This became increasingly difficult as complaints continued to be made. After the meeting on 23 February 2005, Mr Court says regular concerns were brought to his attention by a number of staff regarding the professional standards of Dr Windrum's work and his behaviour in the laboratory. The majority of the concerns were raised by Ms Pohlner, Mrs Townsend and Ms Harris and related to Dr Windrum regularly making disparaging remarks about Mr Court and Ms Pohlner and other staff involved in the management of Matrix. Mr Court said after receiving the document titled "Feedback on Graham Windrum" from Mrs Townsend and other complaints, he continued to bring these to the attention of Dr Windrum, advising that he could not continue to keep warning Dr Windrum about these matters. Dr Windrum's response was that none of what was being said was true. The document prepared by Mrs Townsend relevantly provided: ▫ issues with bad taste, sexist, racist and other offensive jokes/comments around staff - on one occasion reducing a staff member to tears ▫ issues regarding not properly checking reports prior to verification ▫ issues regarding incorrect dictation - different dictation in micro to conclusion, would very rarely admit to it being his mistake - always the typist's mistake ▫ issues regarding rude, angry and unfair treatment of staff member in relation to computer issues, phone calls at unreasonable hour whilst staff member at home and interstate because of computer issues at lab and rude and angry response when staff member tried to assist - he didn't like to have his "work" delayed at all but once finished was quite happy to delay others ▫ putting ever increasing pressure on staff by arriving at lab earlier and earlier and constantly putting pressure on admin staff to start earlier to fit in with his desired working hours ▫ leaving lab usually by midday at latest meaning not available when clinic doctors ring wanting clarification or extra information on patient reports ▫ at time of his apparent "salary negotiations" around August 2004 was very bitter, angry and took this out on staff by being short tempered, uncommunicative, rude, sarcastic - constantly making derogatory comments about management ▫ staff were generally concerned that he wasn't taking due diligence with his reporting ▫ from the time of appointment of Suzanne Pohlner he constantly criticised her, belittled her ability, suggested she was incompetent, wouldn't refer to her by name, was always derogatory when referring to her ▫ complained that Suzanne Pohlner and Peter Court were not doing enough to actively find another pathologist ▫ commented that he had been told by a 'source' that Suzanne Pohlner had been "fired" from her position at Gribbles as was not respected by people in that company ▫ once made aware that Simon was being hired would tell everyone visiting the lab, including the TNT courier, that he had been "fired" causing embarrassment to staff ▫ when asked by the NATA assessor whether anything had changed in the lab since our earlier submission Linda Harris and Lynne Townsend replied that nothing had but Graham Windrum responded that that was not true because he had been 'fired', again causing an awkward situation for staff ▫ staff having to field enquiries from clinic staff wanting to know if it was true that he had been fired because he had earlier told them that or told their doctors that (balance of document not part of the tender) 55 Each of the respondents' witnesses were subject to vigorous cross-examination in respect of their evidence that Dr Windrum wished to reduce his workload. Ms Harris, the Laboratory Manager at the time, gave evidence that from mid 2004, Dr Windrum would regularly say to her that he was unable to take any leave because there are no other pathologists available to cover for him. This is denied by Dr Windrum. In or about late 2004, Ms Harris said that Dr Windrum said to her that he wanted Matrix to recruit another pathologist because he wanted to work less hours and to take more leave. He also referred to the need to cover the absence, over the Christmas period of a number of pathologists practicing at the laboratory who were going on leave. Ms Harris was cross-examined regarding this evidence and forthrightly maintained that Dr Windrum had said to her that he wanted to work less hours. The proposition that he had not said this to her was repeatedly put to her and she consistently confirmed that Dr Windrum had informed her on or about mid to late 2004 that he wished to work less hours. I accept Ms Harris' evidence on this issue. 56 Mrs Lynne Townsend, the office manager of the respondent, at the relevant time, gave evidence that from about mid 2004, Dr Windrum said to her on a number of occasions that he wanted Matrix to recruit another pathologist because he wanted to work less hours. Her evidence was that the requirement for Dr Windrum to vacate his position as supervising pathologist if he were to work fewer hours was raised in management meetings at the laboratory in late 2004. The meetings which were attended by Dr Windrum, Ms Pohlner, Ms Harris and Mrs Townsend on 2 July 2004, 24 September 2004 and 7 December 2004 all record that investigations had been ongoing into the possibility of employing another pathologist. Mrs Townsend's evidence is that the recruitment of Dr Clark, who had worked as a locum in 2002, to fulfil the request made by Dr Windrum of working less hours and also to assume the role of supervising pathologist was also discussed in these meetings. Mrs Townsend did not recall Dr Windrum objecting to any of the proposals or resolutions made in those meetings. Her evidence was Dr Windrum would regularly make comments to her throughout late 2004 that: "they've done nothing to get another pathologist. What is that woman doing to get another pathologist? I still haven't heard anything about what they are doing to get another pathologist." These comments are denied by Dr Windrum. 57 Mrs Townsend's evidence is that after Dr Clark was hired by Matrix in or about December 2004, Dr Windrum appeared to change his mind about working less hours and supporting the recruitment of Dr Clark. She recalled Dr Windrum complaining to her regularly about Matrix hiring Dr Clark. Her evidence was that Dr Windrum commenced saying he did not need any help, that he was the supervising pathologist and he could handle it on his own. Dr Windrum denies making these comments. Mrs Townsend also recalled that Dr Windrum, on a number of occasions, complained to staff in the laboratory after Dr Clark was hired and also people who visited the laboratory that he had been "fired". This made both staff and visitors uncomfortable. She said Dr Windrum made a similar comment in front of a NATA examiner which was very embarrassing. Mrs Townsend insisted that she informed Mrs Pohlner that Dr Windrum was telling staff and others that he had been "fired". During cross-examination, it was put to Mrs Townsend that the minutes did not record Dr Windrum stepping aside as a senior pathologist. Mrs Townsend accepted that this was the case, but stated that this matter was definitely raised during management meetings. She candidly conceded that it would have been better to have someone apart from herself taking the minutes because she tended to get involved in the discussions and may not have written everything down that she should have. Her evidence was that the management meetings were very informal and there was a grey line between when the meeting actually started and when it stopped. Her recollection was that it was definitely discussed. It was put to her on a number of occasions that it did not occur and Mrs Townsend quite emphatically insisted that it had. 58 I found Mrs Townsend to be a most impressive witness and I accept and prefer her evidence to that of Dr Windrum in each area where there is a dispute between her evidence and that of Dr Windrum. Mrs Townsend's evidence was that the topic of Dr Windrum working less hours came up on numerous occasions and went on for quite a while. Her evidence was that Linda Harris, Dr Windrum and herself would talk about it quite a lot when they were together. She said that Dr Windrum was getting tired and that he wanted to spend more time with his daughter Georgia and maybe do more flying. It was in that context that Dr Windrum had first raised reducing his hours with Mrs Townsend. She said the first discussion had occurred in the second half of 2004, although she could not recall a precise date. Mrs Townsend's evidence was that she had mixed emotions about Dr Windrum stepping aside. Her evidence was that she enjoyed working with him as he could be very pleasant but in the latter part of his time with Matrix that became less and less the position. 59 Dr Clark's evidence on this aspect of the case was that in or about November or December 2003, he called Matrix and had a conversation with Dr Windrum as follows: Dr Clark: I saw the position for a pathologist advertised earlier in the year and I was wondering whether it was still available? Dr Windrum: You should contact Peter Court. I am planning on reducing my hours, so I think Combined Pathology is looking for someone to act in the fulltime position of supervising pathologist to replace me. Dr Clark took no further action at this time. 60 In or about May 2004, Dr Clark received a telephone call from Linda Townsend who asked him if he was still interested in working for Matrix as a replacement for Dr Windrum. His evidence was that Mrs Townsend said to him that: "Graham is blackmailing us and threatening to leave." He did not pursue the matter any further at that time. However, in about October or November 2004, he again spoke to Mrs Townsend and he enquired if Matrix was still looking for someone to replace Dr Windrum as the supervising pathologist. Mrs Townsend advised Dr Clark that he would talk to Mr Court and Ms Pohlner and get back to him. She called him back and asked him to forward a resume and stated that Ms Pohlner would be in contact with him. Shortly thereafter, in or about October or November 2004, Ms Pohlner contacted Dr Clark and asked him what he was looking for and would he be prepared to work as the supervising pathologist. Dr Clark said that he would and Ms Pohlner indicated that she would arrange a meeting to further discuss the matter. 61 In late 2004, Dr Clark had a meeting with Mr Court and Ms Pohlner in a cafe on the Pacific Highway at Gordon which was located near the first respondent's premises. The meeting lasted for about one and a half hours. Dr Clark's evidence was that Mr Court opened the discussion by informing him that "Graham wants to reduce his hours and we are looking for someone suitable to replace him as the supervising pathologist. Can you tell us about your background and experience?" Dr Clark was questioned extensively on his understand of the role as supervising pathologist and his preparedness to act in that role. The expected hours, his involvement in ongoing education of both laboratory staff and referring doctors was also discussed. Ms Pohlner asked Dr Clark whether he was prepared to work with Dr Windrum, given that he was staying on in a reduced capacity to which he advised he was. Dr Clark stated that he had minimal interaction with Dr Windrum when he had previously been at Matrix but he suspected he had made some adverse comments about him but he was unaware of the substance. During the meeting Dr Clark said that if he was going to be the supervising pathologist that he would require at least 130 cases per day. This was agreed to on the basis of 130 cases per day, five days per week. The meeting concluded with all present agreeing that Dr Clark would be the new supervising pathologist providing that the parties could agree on a remuneration figure. Dr Clark was asked to provide what he wanted to be paid to Ms Pohlner and to discuss it with her. 62 At this stage, no specific date was set for Dr Clark's commencement as the supervising pathologist. However, an estimate of mid 2005 was discussed. This allowed him sufficient time to give the required three months notice in respect of his current position. Mr Court and Ms Pohlner requested that Dr Clark discuss the matter with Dr Windrum. After the discussions regarding the supervising pathologist role had concluded, Mr Court asked Dr Clark if he would be prepared to work as a locum during the Christmas period as a number of pathologists were taking leave. He agreed to this. Prior to commencing as the locum, Dr Clark received a call from Dr Windrum informing him of the new computer system and other technological and procedural changes. He began as the locum for a couple of weeks in January 2005. Dr Clark did not see Dr Windrum as he came in early, whereas Dr Clark would come in later. Dr Clark continued to have discussions with Ms Pohlner regarding his commencement date as the supervising pathologist. It was agreed that he would commence at the end of May 2005. He recalled that Ms Pohlner had asked him whether he may be able to start earlier, if required, because she was afraid that Dr Windrum might stop work altogether. He indicated that he could do this. Dr Clark stated that he commenced as the supervising pathologist with the respondent on or about 17 May 2005, about a week earlier than expected. He executed a contract on 21 July 2005. Following the departure of Dr Windrum, Dr Clark said that he had an opportunity to observe his work. In his opinion, Dr Windrum took short cuts, occasionally failing to conduct a proper investigation of the pathology samples. 63 In respect of Dr Windrum's evidence that he showed Dr Clark around the laboratory and introduced him to staff in late December 2004, Dr Clark's evidence was that this meeting did not occur with Dr Windrum and that he did not meet the staff who worked at the laboratory until May of 2005. This would have been an event Dr Clark recalled. I find it did not occur. During cross-examination, Dr Clark clarified his evidence in respect of the conversation he had with Dr Windrum in about November or December 2003. His understanding of the discussion at this time was that Dr Windrum was contemplating relinquishing his role as supervising pathologist. He did not enquire whether this would involve a reduction of his hours or whether he would cease employment altogether. His evidence was that Dr Windrum had told him Mr Court was looking for a pathologist and they discussed the role of a supervising pathologist. It is likely that Dr Clark is mistaken about this date. It is more likely that the conversation took place in 2004. 64 In late 2005, Dr Windrum wrote to Dr Clark referring to two cases in which he believed there was a considerable discrepancy in the diagnosis. He believed that he was ethically obliged to inform Dr Clark of these cases and invite his comments. In respect of the first case, Dr Clark believed that it had been dealt with to the satisfaction of the patient and the patient had been completely treated. He had no knowledge whatsoever of the second case referred to by Dr Windrum. Dr Clark said that he would have analysed and reported on approximately 20,000 cases during the year. At the time that Dr Clark was engaged by Matrix as the supervising pathologist, Matrix was undertaking approximately 1,000 - 1,100 cases per week. Dr Windrum had been undertaking approximately 70 per cent of Matrix's cases. In order for Matrix to meet Dr Windrum's requirements of working only two to three days per week, this would have meant him undertaking somewhere in the range of 250 cases per week. The work undertaken by Matrix would have allowed this to occur and at the same time accommodate Dr Clark. 65 The evidence of the witnesses called by the respondents is, and I find overwhelming, that Dr Windrum was unequivocal in his statements to the various witnesses about reducing his workload. I reject the suggestion by Mr Coleman that each of them were untruthful. Each of the respondents' witnesses had separate conversations with Dr Windrum, wherein he indicated his desire to reduce his workload. Dr Windrum could identify no documentary evidence that supported his position and called no witnesses to corroborate his contention that he never sought to reduce his workload. 66 There is an objective and entirely understandable foundation for his stated intention to reduce his workload, namely, that he had been working six to seven days per week and performing as much as 70 per cent of the Matrix's pathology workload. He had a heart attack, although Dr Windrum asserts that his cardiologist never suggested that he should slow down as a consequence of this despite being 76 years of age at the time. None of the witnesses called by the respondents were undermined in cross-examination. Their credit in respect of Dr Windrum's stated desire and intention to reduce his hours (with consequential relinquishing of his supervising pathologist position) was not dented at the end of cross-examination. This is particularly so in light of Dr Clark's evidence which was that he had a conversation with Dr Windrum about this matter well before he was engaged by Matrix. I reject the applicant's contention that the respondents' witnesses conspired to concoct their evidence about Dr Windrum's alleged desire to reduce his hours and accordingly cause him to relinquish his position as supervising pathologist. 67 Mr Kimber SC, who appeared for the respondents with Mr A Connolly of counsel, contended that on a proper analysis of the foregoing evidence, the following findings and conclusions should be reached. With some modifications, for the following reasons, I embrace the respondents' submissions to find that the agreed terms of the variation to Dr Windrum's contract were those set out in the letter from Ms Pohlner to Dr Windrum dated 24 February 2005, which had been sought by Dr Windrum: (i) Mrs Pohlner, who was the general manager of Matrix at the relevant time (namely June 2004 – May 2005), was an extremely credible and convincing witness and she indicated, in unequivocal terms, that the principal (if not the only) reason that Matrix commenced to look for another pathologist as and from June 2004 was because Dr Windrum indicated that he wanted to cut back, slow down/reduce his hours. She also gave credible evidence as to why the newspaper advertisement that she placed in September 2004 sought suitable persons interested in being full-time or part-time pathologists with Matrix. That is, Mrs Pohlner indicated that, given the chronic shortage of pathologists, Matrix needed to "cast its net" as wide as possible and then make suitable work arrangements depending upon the skills and experience of any applicants that surfaced who were both interested and suitable to work for Matrix; (ii) Mrs Pohlner's evidence fundamentally undermined one of the central planks of Dr Windrum's case, namely that the court should accept that Matrix commenced "looking for another pathologist" as and from June 2004 not because of any intimation from him that he desired to cut his hours, but rather because it was seeking to expand and grow the business and hence was seeking another pathologist to take up what was then anticipated to be an increase in workload in the foreseeable future. Apart from the fact that such an approach to hiring specialist staff does not make sense objectively, the position is more conclusive in circumstances where there was a chronic shortage in the category of staff being sought because it is obvious that any pathologist with a potential interest in working for Matrix would want to know (and in Dr Clark's case definitely wanted to know) the level of work and hence remuneration that would be available on commencement, not just if expansion plans went ahead. In any event, Mrs Pohlner's evidence clearly indicated that Matrix would not have gone into the market place looking for another pathologist at any time before the end of 2004 if Dr Windrum had indicated his preparedness to continue to work at his June 2004 levels up to and beyond Christmas that year. (iii) The other central plank of Dr Windrum's case was that all the Respondents' witnesses (other than Ms Hagan) had conspired (seemingly as and from June 2004) to get rid of Dr Windrum with the essential plan being (so it seems from propositions put to the Respondents' witnesses in cross-examination) that they would secretly endeavour to find another pathologist who was prepared to work full-time for Matrix and take on the supervising pathologist role and, when such person was found, they would simply inform Dr Windrum that he was no longer going to be the supervising pathologist at all and that hence forth his workload would be reduced to only 250 cases per week. The difficulty with this theory and why I reject it, can be summarised as follows: a. It rests purely on the word of Dr Windrum without any support from any documentary material let alone from any other witness called on behalf of the Applicants and ignores the fact that the hiring of Dr Clark was not a secret. b. The theory flies in the face of the chronic shortage of pathologists and the repeated steps taken by Matrix to keep Dr Windrum "happy", as confirmed in the letter to him on 24 February 2005. c. If there was a concerted plan by Matrix to simply get rid of Dr Windrum as soon as a suitable "replacement" was found whilst at the same time avoiding the risk that he might walk out before the replacement actually commenced, then this could have been done merely by providing Dr Windrum with no information about Matrix's intentions at least until the replacement arrived (the sense in this approach would have been stronger once the decision was made that Dr Clark was to be the replacement). d. Writing the letter of 24 February 2005 confirming Matrix's agreement to having an ongoing work relationship with Dr Windrum for the provision of pathology services is hardly a step that Matrix would have taken if their true desire was to get rid of him. e. Even with Dr Clark coming on board from May 2005 with a guarantee of 130 cases a day, Matrix still needed sufficient pathologists to cover the other 350-450 cases that came through the doors each week given the total was 1,000 – 1,100 per week on average. Dr Krausz had wound down his work for Matrix primarily as a consequence of his greater commitment to Matrix's competitor, Histoderm, and, on Dr Windrum's own evidence, Dr Cortis-Jones lacked the technical expertise and experience to work very quickly and hence he could not be relied upon to carry a substantial case load on a regular basis. f. Persons that would have to be characterised as the principal conspirators, namely Mrs Pohlner and Mr Court, flatly denied the existence of any such conspiracy and they were honest and believable witnesses who provided convincing evidence as to the true motivations for the changes that were made to Dr Windrum's working arrangements with Matrix. In my view, consistent with the history of accommodating Dr Windrum, the changes were made at his behest and with a view to again accommodating his wishes, which were entirely understandable and reasonable given his advancing years, his high workload and his heart attack in January 2003. (iv) It is significant to note that Dr Windrum was in favour of changing the basis of his remuneration from a daily rate to a case numbers basis in October 2004 and he acknowledged that such remuneration arrangements were much more flexible than a daily rate arrangement. That is, moving to a case based remuneration well facilitated Dr Windrum's desire to work less, and the existence of such a desire is well supported by the fact that, at this very time, namely October 2004, Dr Windrum reduced the number of days he worked by ceasing to work on Mondays. That is, whereas formerly he was working Monday to Saturday, thereafter he worked Tuesday to Friday and every second Saturday. (v) Dr Windrum has also asked the court to accept that he was "upset" with what was "proposed" at the meeting held on 23 February 2005 because he had no idea prior to that date that such changes were going to take place, but the evidence is overwhelmingly to the contrary. That is, Dr Windrum well knew what was going to change because those changes had been discussed with him and were, in fact responses to his own expressed desires (or, at least with respect to his role as supervising pathologist, involved his acceptance of the fact that if he was to reduce his hours in the laboratory by reducing his workload substantially that he could not continue as the supervising pathologist). Furthermore, the Respondents' witnesses Mrs Pohlner and Mr Court, in conjunction with clear evidence from Dr Windrum himself, advanced an entirely plausible explanation for why Dr Windrum was "upset" in late February 2005, namely that he was incensed when he realised that in spite of his vehement opposition to Dr Clark being engaged on any basis (let alone on a full time basis as supervising pathologist), that Matrix had decided (as he accepted that it had the undoubted right to do) to engage Dr Clark as a full-time pathologist at Matrix and to have him assume the role as supervising pathologist for Matrix at the Gordon laboratory. I prefer this explanation for Dr Windrum being "upset" at that time as opposed to the Applicants' case that Dr Windrum was taken by surprise and was the victim of a conspiracy to get rid of him. The applicant's contention, especially when it cannot survive in the face of the substantial body of evidence that unequivocally establishes Dr Windrum's deep seated (but totally unfair) "professional dislike" of Dr Clark. That evidence can be summarised as follows: a. Dr Clark worked at Matrix as a locum in June 2002 whilst Dr Windrum was overseas but at the end of that locum period there were a few days when they both worked at Matrix. It was during this time that Dr Windrum seemingly became convinced that Dr Clark was an incompetent pathologist. b. Whilst Dr Windrum asserted that clinic doctors were complaining about the style of Dr Clark's reports and reporting, those complaints seemed to have amounted to no more than a preference for the style of reporting used by Dr Windrum. c. Dr Windrum also took umbrage with terms and terminology used by Dr Clark which he regarded as unacceptable although he conceded in his affidavit in reply that he was "pedantic" in this regard. d. Whilst Dr Windrum asserted that later in 2005 he did what was ethical by sending Dr Clark a "without prejudice" letter wherein he pointed out that he had misdiagnosed two cases (without any reference to the approximately 20,000 cases that Dr Clark reported on that year) and advised that Dr Clark should notify his medical insurer. The reality is that it was entirely inappropriate for Dr Windrum to send such a letter. This conduct revealed a desperate determination on Dr Windrum's part to portray Dr Clark as incompetent. e. The evidence revealed that Dr Windrum showed Dr Clark no such professional courtesy during or at the end of the locum in June 2002 by particularising the complaints allegedly made against him by clinic doctors, but rather shared his "professional concerns" about Dr Clark's competence with other senior pathologists in New South Wales on an informal basis behind Dr Clark's back. f. Such was his opposition to Dr Clark being hired again by Matrix on any basis that he actually drove to Newcastle to register his strong opposition to Dr Clark and further asserted in his evidence unconvincingly in my view that Mr Court had in fact agreed after Dr Clark's locum in June 2002 that he would never hire Dr Clark again. Dr Windrum's assertion was that Mr Court had reneged on that agreement when he decided to hire Dr Clark as a locum for Christmas 2004 and thereafter as a full-time pathologist with Matrix. Conclusion 68 Dr Windrum's behaviour after 24 February 2005 was much more consistent with the respondents' view of this matter than it is with the case now being pressed by Dr Windrum. If Dr Windrum's evidence was now to be accepted that what occurred on 23 and 24 February 2005 was, in effect, a fundamental breach of his contract with Matrix, then it is surprising that he took no steps at the relevant time to complain about the unilateral variation of his contract. During Dr Windrum's period with Matrix, he regularly wrote to Mr Court. 69 On a proper analysis of the evidence, I find that Dr Windrum sought a variation to his contract of employment which would enable him to reduce the number of cases that he did and relinquish the supervising pathology position. In consenting to the variation to the contract, the respondents provided Dr Windrum with three months notice of its variation. I do not find any unfairness in respect of Dr Windrum's contract or its variation. Did Dr Windrum's Conduct Justify Summary Termination? 70 The letter terminating Dr Windrum's arrangement with Matrix which was provided to him by a security guard on 16 May 2005, was in the following terms: The company has decided that your failure to fulfil the responsibilities of Supervising Pathologist at Combined Pathology constitutes a serious breach of our agreement and the agreement will be terminated effectively immediately. Our reasons are as follows: You have not satisfied the National Pathology Accreditation Advisory Council (NPAAC) Requirements for Supervision of Pathology Laboratories. As Supervising Pathologist, you should be present in the laboratory during normal working hours and be available for telephone consultation at all other times. It has come to our attention that you are regularly leaving the laboratory between 11am and midday. This does not satisfy NPAAC requirements and leaves the laboratory inadequately supervised for the majority of the normal working day (9am to 5pm). You have failed to provide timely advice to clinicians on the evaluation and interpretation of results of laboratory examinations. It is the responsibility of the Supervising Pathologist to provide a consultative service to the clinicians and this requires your presence in the laboratory, where you are able to review results and slides, during the clinicians' normal working hours. You have failed to provide the hands on training, supervision and feedback expected of a supervising pathologist. The Supervising Pathologist is responsible for operational practices and staffing of the laboratory and as such we expect you to ensure that all staff and contracting pathologists are appropriately trained and able to carry out their duties competently. During a recent NATA accreditation visit it was brought to our attention that the cut-up training program implemented at Combined Pathology does not meet NPAAC Guidelines for the Performance of the Pathology Surgical Cut-up. You have failed to meet NPAAC guidelines as supervising pathologist to ensure that medical, scientific and technical staff participate in continuing education. There has been no continuing education provided under your supervision for scientific and technical staff, nor is there any documented evidence of continuing education for the pathologists. This failure by you, as the supervising pathologist, to meet NPAAC guidelines was evidenced during the recent NATA accreditation visit. You are not fulfilling all of the duties outlined in the Statement of Duties (attached) for the Supervising Pathologist or Combined Pathology which has applied to the position since 2001. These include: * Direct supervision of the daily cut-up * Direct supervision of specimen reception/handling * The development of a business marketing plan which incorporates future growth and development of the Practice * Directly and actively market the Practice with a view to widening the referral base of private practitioners * Report weekly, either by phone or email, to the Director in relation to the development and implementation of marketing practices and procedures Your absence from the laboratory in the afternoon makes it impossible for you to directly supervise the daily cut-up and specimen reception/handling. Also, there is no documentary or other evidence that you have developed or implemented any marketing practices or procedures or attempted to market the practice or widen the referral base of private practitioners. We consider this a breach of our agreement. You have made unsolicited, unwarranted, and defamatory remarks about Matrix, its directors, and its management, to other members of staff. This behaviour is completely inappropriate for someone of your status within Matrix, and has created disharmony within the workplace that you have been entrusted with the responsibility to supervise. This has made it impossible for some senior staff members to continue to work and communicate with you effectively. We have evidence that you have passed confidential business information to one of our competitors. We consider this to be a serious breach of confidentiality. We have serious concerns regarding the time you are spending examining cases. It appears that you have greatly increased the rate at which you are examining slides since your remuneration changed to a per case basis and we believe this may present a significant risk to our business. Recent scrutiny of the invoices provided by your company, Monkerai Pathology Services, has revealed that you have overcharged us for 47 days work since February 2003. This amounts to an overpayment by us to your company of $89,750.00 plus GST. 71 In opening the case for the respondents, Mr M J Kimber SC, submitted that the respondents did not seek to press any claim for the repayment of the alleged overpayment to Dr Windrum. Senior counsel also accepted that the evidentiary onus was on the respondents to prove the conduct which justified the summary dismissal of Dr Windrum. Overcharging in Respect of Variation of Contracts 72 Mr Court's evidence was that on or about April or May 2005, it was brought to his attention by Ms Pohlner that she had reviewed Dr Windrum's reporting statistics and tax invoices and had discovered that Matrix had been overcharged by Dr Windrum in 2004. The review showed that Dr Windrum was charging for working on Sundays when the Laboratory was closed. Dr Windrum contended that the arrangement that he entered into with Mr Court in September 2003, was that he could charge for more than five days a week if he was doing an average of 100 cases per day over the seven day week. The overcharging related to the period between late 2003 and October 2004. Mr Court strongly rejected the suggestion by Dr Windrum that he agreed to any averaging of cases done per day, allowing for Dr Windrum to charge over seven days. 73 The issue in respect of overcharging had been raised with Dr Windrum in 2003 when three examples of overcharging had been brought to his attention. Whilst it is true that Matrix acquiesced, both at that time and thereafter, in paying invoices rendered by Dr Windrum that were not in accordance with his agreement with Matrix, being based on an averaging, rather than on a proper application of the minimum number of cases per day as required by Mr Court, I accept Mr Court's evidence that such acquiescence was not based upon Matrix accepting Dr Windrum's practice in this regard was appropriate and fair, but rather on the basis that Dr Windrum's indispensability meant that Matrix was effectively hamstrung from taking any effective steps to correct Dr Windrum's unacceptable behaviour in this regard. Mr Court's evidence was that when he challenged Dr Windrum about overcharging, he "cut his feet off". He explained that by the use of this expression, he meant that he should not dare question what Dr Windrum said, or his method of charging. Mr Court explained that he formed the view at this time (2003) that if he had gone any further, he would have caused a huge row with Dr Windrum and he may have walked out on him. Mr Court's behaviour in respect of the overcharging is consistent with his approach to claims made by Dr Windrum for increases in remuneration. He said that he would not have dared reject outright any claim by Dr Windrum. Such was the strength of his bargaining position. Mr Court usually negotiated with him either agreeing with his argument that he should receive an increase or adopting a different method, as he did in October 2004, which resulted in an increase in remuneration for Dr Windrum. 74 It was Dr Windrum's overcharging from 2003 to October 2004 that was referred to in the letter of summary termination. During cross-examination, it was put to Mr Court that Dr Windrum had explained his understanding of rendering invoices that if he did more than 700 patients in a week, he was entitled to charge for seven days. Mr Court agreed that Dr Windrum had suggested this to him, but he stated he had never accepted it, although he continued to pay accounts rendered by Dr Windrum. Mr Coleman suggested to Mr Court that this reflected the agreement. Mr Court's evidence in respect of this proposition was as follows: A. That is not the agreement. Dr Windrum was our supervising pathologist. He effectively, as I mentioned before, chopped my legs off at the waist in November 2003. It is as simple as that. It is business practice and it was never an arrangement he would be paid an average. Q. You felt you were being taken advantage of? A. I knew I was being taken advantage of. Q. You felt you were taken advantage of because he was charging in relation to days where you believed he wasn't actually working? A. Graham had broken our agreement. 75 In my view, as this matter had already been the subject of full discussion between Mr Court and Dr Windrum in 2003, there is no basis to find that, had Dr Windrum been given any further opportunity to respond to the overcharging allegations immediately prior to 16 May 2005, the summary termination would not, or should not have occurred. Even if it is accepted that Dr Windrum did some work from home on Sundays, noting that he had been provided with a computer, he was never entitled to charge Matrix a full day fee for that work, although he repeatedly did so. Such persistent overcharging after the events of 2003 constituted serious misconduct and was a proper basis for summary termination of Dr Windrum. 76 Mr Coleman submitted that in light of Matrix's acquiescence in paying all Dr Windrum's invoices, the respondents were estopped by their own conduct from relying upon such a matter as a reason for summary termination and in the context of s 106, demonstrates manifest unfair conduct by the respondents. Counsel referred to the decision of Kirby J in Concut Pty Ltd v Worrell (2000) 103 IR 160 at [51] and submitted that as such breaches were "ancient in time", reliance could not be placed on them. At [51] Kirby J stated: ... 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. (Footnotes omitted). 77 The difficulty I have with this submission is that firstly, as Kirby J noted "acts of dishonesty ... once discovered, ordinarily ... authorises summary dismissal." Furthermore, it is not correct to characterise the overcharging as ancient in time as such conduct occurred within six months of the date of dismissal. To rely on such conduct to terminate the contract does not manifest unfairness. In any event, when considered, together with the other reasons for summary termination, to which I now turn, in my view, the matters relied upon as a whole summary termination. Alleged Poor Work Performance and Conduct Issues 78 Throughout 2004, Mr Court's evidence is that he had cause to contact Dr Windrum on a number of occasions to discuss the problems other staff had with his behaviour and performance. Mr Court's affidavit evidence was that he said to Dr Windrum: "I have been receiving complaints from staff at the lab about you. They are becoming very uncomfortable working with you. It's not just one, but a number of staff members all raising the same concerns." Dr Windrum said: "This is rubbish. They are all teaming up to get me out the liars. Don't you trust me? What are they saying now?" Mr Court said: "I trust you Graham, however I trust them as well. The point is that this quite a regular occurrence. They are complaining that you are racist towards other staff members, that you make sexist and offensive comments around female staff to the point where they cry, that you openly complain about Suzanne and myself, that you undermine the reputations of the other pathologists so as to make yourself look superior, and that you blame everybody else for the mistakes you make. This is damaging staff morale and driving them away. What also concerns me is that you are arriving to the lab extremely early and leaving it unsupervised when you leave by lunch time. This is driving the staff made because they often have to get to the lab before 5 am, and means that you are not fulfilling your role as Supervising Pathologist. You know what is expected of you, you have the Statement of Duties and the NPAAC requirements. I must warn you that this can not continue. This is an official warning. If you continue to behave inappropriately and fail to fulfil your duties we will have to terminate the contract." Dr Windrum said: "I don't agree with what you are doing. You can't get rid of me and tell me what to do because you can't replace me. I don't care what you or the other staff say." 79 Dr Windrum's evidence was that he was never told that Mr Court was unhappy with his performance. 80 In mid 2003, Mr Court was advised by Mrs Townsend that Dr Windrum was developing what became known as the short cycle tissue processor ("the short cycle") to improve efficiency in the laboratory. The effect of the short cycle was to shift the work in the laboratory from one cycle per day to two cycles per day. This allowed up to double the work to be completed without the need to double the amount of equipment needed, which was the alternative that had been proposed. The procedure decreased turnaround time and decreased costs. However, both Mrs Townsend and Ms Harris advised Mr Court that the short cycle did not improve efficiency in the laboratory, but simply allowed Dr Windrum to leave the laboratory very early in the day. The short cycle led to some of the staff having to arrive at work before 5.00 am in the morning and the laboratory being left unsupervised by Dr Windrum for a large proportion of the day. 81 Mr Court spoke to Dr Windrum on or about late 2003 about the problems caused by the short cycle. Mr Court's affidavit evidence is that he said: "This short cycle on the tissue processor is not working. The staff are not happy because they have to arrive the lab extremely early in the morning. You are leaving by lunch time to go to your other job and leaving the laboratory unattended by a supervising pathologist, and the difficult cases are being left to inexperienced staff. When anyone tries to ring you because they have a problem they can never get in contact with you either. This is very risk and unreasonable for the staff." 82 Mr Court states that Dr Windrum replied: "I don't care, it's my lab and I will do it how it suits me. If you go back to the old tissue processing method, I will leave and you be in an even worse position because you won't have a supervising pathologist." 83 Dr Windrum's evidence was that he would arrive at the laboratory at approximately 6.00 am and begin dictating his reports of the slides that were processed the previous day. He said the only staff member who arrived early was Ms Harris who arrived around 5.00 am. Irene Kong arrived at 6.00 am, Lisa at 6.30 am and Grace arrived at 7.30 am. Dr Windrum stated that Ms Harris had said to him that as she lived on the Central Coast and her husband worked at Royal North Shore Hospital, it suited her to start early. 84 Ms Harris, the Laboratory Manager until June 2007, gave evidence that she consulted Dr Windrum on a number of occasions about starting work later so that the laboratory staff did not have to attend work so early in the morning. She told Dr Windrum that starting so early puts unnecessary stress on the staff, especially since he created a sense of urgency by hovering around waiting for slides. Dr Windrum continued to start work very early despite her direction. Ms Harris also stated that by coming in early, Dr Windrum would complete, on occasions, all of the slides so that there was no work for other doctors when they arrived. 85 During her oral evidence, Ms Harris stated that it was not a matter of her electing to commence work early, it was necessary to have the work ready for Dr Windrum to start at the time that he wanted to arrive at the laboratory. However, her evidence, which I accept, was that the arrangement was not one of her choosing and that she would have happily started at 8.00 am. Her evidence was that the short cycle was not necessary and that it had no effect on the turnaround time of the specimen because the reports were matched up and sent in the afternoon. Having the slides ready at 6.00 am made no difference to when the report went out. If Ms Harris had not commenced work at 5.00 am, there would not have been any trays or specimens for the other pathologists to assess when they arrived, approximately from 7.30 am onwards. Ms Harris stated that Dr Windrum would almost always leave the laboratory by midday. She usually left between 1.00 pm and 2.00 pm. However, she accepted there were occasions when he was still there when she left. During cross-examination, Ms Harris, in answer to a question whether she was forced to commence work at 5.00 am, stated that in her position, she was required to keep the pathologists happy because they were not easy to find. It was in that way that she was forced to keep the hours that she did. She stated that she did not raise any concerns in respect of Dr Windrum's performance or his duties, or inappropriate behaviour with Mr Court. 86 Upon a review of the evidence, I find Mr Court attempted to balance complaints he had received regarding Dr Windrum with the need to have Matrix operating efficiently and co-operatively. On 23 February 2005, a meeting occurred between Mr Clark, Ms Pohlner and Dr Windrum to discuss how the succession of Dr Windrum as Supervising Pathologist could be arranged to best suit all the parties which I have referred to earlier in these reasons. From this period, further complaints were brought to the attention of Mr Court. On 7 March 2005, Ms Pohlner, after orally raising concerns about Dr Windrum's behaviour, wrote to Mr Court. The terms of this letter have been set out earlier at [51]. 87 Dr Windrum denied acting in a derogatory manner towards Ms Pohlner and other Matrix management. Mrs Townsend, who I found to be a forthright and reliable witness, gave evidence that Dr Windrum behaved offensively, or negatively in front of laboratory staff, that he was arrogant, and on occasions, short tempered. She stated that Dr Windrum told sexist jokes, recalling a joke about Mrs Mares being overweight, which caused her to burst into tears. Her evidence was that it was common for her to ring Mr Court and raise concerns that she had about Dr Windrum. After an assessment by National Association of Testing Authorities ("NATA") which occurred on 4 April 2005 Mrs Townsend prepared a document titled "Feedback on Graham Windrum, Lynne Townsend, Office Manager, Combined Pathology" which she provided to Ms Pohlner. This document which contained criticisms of Dr Windrum has been set out earlier in these reasons at [54]. 88 As a result of the ongoing and regular complaints made to Mr Court following the meeting on 23 February 2005, his evidence, which I accept, is he continued to contact Dr Windrum to discuss the complaints. His evidence was that Dr Windrum refused to accept the complaints were valid. Mr Court advised Dr Windrum that unless he behaved appropriately, his contract would be terminated and he could not keep warning him. According to Mr Court's evidence, Dr Windrum said that the complaints weren't true and that he had not heard any of them and that some of the staff were just trying to get rid of him. If that happened, he advised Mr Court he would sue him. 89 Mrs Townsend, who I have already found to be a reliable witness, corroborated the evidence of other respondent witnesses that Dr Windrum would regularly arrive at work at 5.30 am - 6.00 am. Mrs Townsend had questioned why Dr Windrum commenced work so early because it put unnecessary pressure on her and other staff. Her evidence was that Dr Windrum did not regard this as an issue for him. He informed her that he went to bed at about 8.00 pm every night, did not sleep well and once he woke up, he had to get going. She suggested that he should go to bed later. 90 The applicants' case is that Mr Court never raised any complaints with Dr Windrum. Mr Coleman relies on Mr Court's evidence that he had to appease and accommodate Dr Windrum because there was a shortage of pathologists and a vital need to have a fulltime supervising pathologist working in the business as the reason for not raising complaints. Mr Coleman also relies on the respondents' behaviour in paying the invoices, even though Mr Court believed that Dr Windrum was overcharging to avoid conflict with Dr Windrum. Although Mr Court candidly admitted he had to keep Dr Windrum happy, I reject the contention that Mr Court did not bring complaints to the attention of Dr Windrum. 91 Mr Court's evidence, in cross-examination, is that when he raised this matter with Dr Windrum, it was made very clear to him by Dr Windrum that he should not dare question him in respect of Ms Pohlner's letter of March 2005. Mr Court discussed the contents of the letter with Ms Pohlner and although not happy about what had occurred, he decided not to take Dr Windrum to task about it. His explanation was that Matrix needed Dr Windrum because there was another three months roughly before Dr Windrum commenced on a part-time basis in accordance with the variation of his contract of employment. Mr Court took into account that pathologists continued to be difficult to engage. 92 In my view, there is a plausible explanation for Mr Court taking Ms Pohlner's complaints further with Dr Windrum at this time. However, it does not follow that Mr Court did not raise earlier complaints with Dr Windrum and seek an improvement in his behaviour. I prefer Mr Court's evidence in this respect that, in particular, during 2004, he raised various complaints brought to his attention by members of staff with Dr Windrum. The comments of Ms Pohlner in her letter to Dr Windrum on 24 February 2005 in which she stated "we greatly appreciate your substantial contribution to the laboratory's success over the last few years and look forward to continuing the relationship" again has to be seen in its proper context. This letter was written to confirm the variation to Dr Windrum's contract and all of the respondents' witnesses recognised that Dr Windrum over the years had made a substantial contribution to Matrix. This, of course, has to be balanced against the criticisms made of Dr Windrum whilst engaged with Matrix. 93 Attached to Dr Windrum's letter of termination was a statement of duties of the Supervising Pathologist. Dr Windrum says that he had not seen the statement of duties before receiving the letter of termination. The statement of duties stated that the hours for supervising Pathologists were 8.30 am to 5.00 pm and that the Supervising Pathologist was required to provide overall supervision of the laboratory and laboratory staff. It then set out a number of specific responsibilities. The respondents tendered a statement of duties bearing the name of Dr I Katz, who was the Supervising Pathologist prior to Dr Windrum. Mr Court's evidence was that it was company practice for a statement of duties to be provided to the Supervising Pathologist and for it to be signed by the pathologist. The statement of duties for Dr Katz that was tendered during the proceedings was unsigned. The statement of duties that Mr Court says was provided to Dr Windrum, although in identical terms, in respect of duties, responsibilities, etc., is set out in a different format to that provided to Dr Katz and does not bear the name of Dr Windrum alongside the area provided for a signature but contains the words "Supervising Pathologist". On balance, I prefer the evidence of Mr Court that Dr Windrum was provided with a statement of duties. I find accordingly. 94 It seems to me that because the Supervising Pathologist was responsible for meeting all licensing and regulatory requirements in relation to the Health Insurance Commission/NATA and any other relevant governing authority which is referred to in the statement of duties, it is more likely than not that the respondents would have chosen to have such a matter recorded in a statement of duties and that statement of duties provided to its supervising pathologist. Furthermore, from 1 October 2003, Dr Windrum and Matrix entered into a formal written agreement headed "Deed to formalise his appointment as a supervising pathologist". This document makes reference to duties in paragraph 5 which, it seems to me more likely than not, was a reference to the duties contained in the statement of duties. 95 Mr Coleman criticised the evidence of the respondents' witnesses submitting that there was a similarity not only in respect of their evidence, but the way it was expressed. I was acutely aware, having perused the affidavit material prior to the commencement of the proceedings that the first applicant was the only witness in his case and that the respondents relied on six witnesses who, in respect of the vast majority of evidence given by the first applicant, disagreed with it. I therefore took care to closely assess the demeanour and credibility of all of the witnesses noting that three of the respondents' witnesses, Ms Pohlner, Ms Hagan and Ms Harris were no longer employed by the respondents. These witnesses had no reason to conspire against Dr Windrum, as submitted by Mr Coleman. I conclude that each of the respondents' witnesses gave credible evidence, which was not undermined in cross-examination. In particular, I found Mr Court and Ms Pohlner to be extremely credible and convincing witnesses, noting their positions as Managing Director and General Manager respectively. The remaining witnesses for the respondents, Mrs Townsend, Ms Harris, Ms Hagan and Dr Clark, although their evidence was more confined where entirely credible. True it is that some of these witnesses were not able to provide specific dates or occasions on which events occurred being at the earliest, six years ago and at the latest, three years ago. To the extent that Mr Coleman submitted that much of their evidence was hearsay and given in generalities to demonstrate an agenda being pursued by the respondents, that being to get rid of Dr Windrum, rather than a genuine attempt to inform the Court of the facts, I disagree. I accept and prefer their evidence to that of Dr Windrum. 96 Mr Coleman refers to a letter written by Ms Pohlner to Mr Chris Wallace of Wavelength Consulting, in which Ms Pohlner said: "The working environment is very pleasant with good rapour between pathologists, technical staff and office staff" as evidencing that there were no work performance issues in respect of Dr Windrum. Once again, this comment has to be read in its proper context. Ms Pohlner had engaged Wavelength Consulting to recruit a pathologist to cover the Christmas period when the majority of the pathologists including Dr Windrum were on leave. It is hardly surprising that in a letter to Mr Wallace, Ms Pohlner would describe the working environment as anything but pleasant. 97 The evidence of the respondents is replete with examples of sexist and derogatory remarks made by Dr Windrum about other staff and pathologist. Ms Pohlner was advised by Ms Harris and Ms Joyce that Dr Windrum had informed them that she was not up to the job and that she had been sacked from her previous position with Gribbles Pathology, which was untrue. Dr Windrum criticised Dr Clark to Ms Pohlner. Her evidence was that Dr Windrum called her a liar, a cheat and said she was dishonest. Ms Patricia Hagan, who was the Manager of the Laboratory between April 2000 and April 2003 gave evidence that remarks and jokes which were made by Dr Windrum were always sexist. Her evidence, albeit general, was that she regularly overheard Dr Windrum making similar remarks to other staff in the laboratory, although she could not specifically recall the dates on which such comments were made, Dr Windrum's behaviour made her feel uncomfortable. Her evidence was that Dr Windrum would often make comments to her about his own sexual behaviour. She recalled on one occasion, Dr Windrum bragging to her about his 30 year old partner and her willingness to procreate with him and engage in a long term relationship. She also recalled Dr Windrum asking her about a very intimate sexual act and asking her to verify its name. Her evidence was that incidents such as these caused her embarrassment and to feel uncomfortable. Ms Hagan gave an example of receiving red roses from a friend which caused Dr Windrum to ask "goodness, what did you have to do to get those?" She took this comment as coming from a sexist point of view. She also stated that Dr Windrum made comments about her walking gear, which comprised a fitted pair of tights and a small top. Dr Windrum suggested to Ms Hagan that she should not wear such clothes in the laboratory and she should not bend over. She took these comments also as coming from a sexist point of view. Her evidence was that Dr Windrum would make comments of a sexual nature a couple of times a week. 98 Ms Hagan's evidence was that Dr Windrum was constantly critical of Dr Simon Clark when he worked at Matrix. She said that Dr Windrum would say that he was not happy with Dr Clark's reporting and that he wasn't good enough to work at Matrix. Ms Hagan also said that Dr Windrum informed her that he had raised the issues he had with Dr Clark's reporting with Mr Court and Dr Krausz saying that he should never work at Matrix. Ms Hagan also stated that she heard Dr Windrum telephone doctors in clinics operated by Matrix to complain about Dr Clark's reporting. Her evidence was that Dr Windrum initiated these calls to doctors, although on occasions, doctors would also contact Matrix seeking clarification of reports. Her evidence was that she saw Dr Windrum get reports and slides and make phone calls. She stated that she believed Dr Windrum was motivated because he was not happy with Dr Clark's reporting. 99 Ms Hagan's evidence was that she left employment with Matrix because her position had been undermined by Dr Windrum. She said she did not leave willingly. Her evidence was that when Dr Windrum wanted to gain more money from Matrix, he used a tactic of not signing reports which placed her in the position where no reports were leaving the laboratory. Her evidence was that she was informed by Dr Windrum that he wanted more money and that was why he would not sign the reports. In cross-examination, Ms Hagan said that the day it came to a head, no reports left the laboratory and she contacted the Health Insurance Commission to seek advice about what she could do. The reports were signed the next day. Ms Hagan's recollection was that she made some handwritten notes of her discussion with the Health Insurance Commission, and raised the matter orally with Mr Court. When pressed by Mr Coleman that it did not happen, Ms Hagan strongly rejected this suggestion. The evidence of Ms Hagan is in respect of conduct that occurred in 2002/2003. In my view, such evidence cannot be relied upon by the respondent to support its decision for summary dismissal. However, the evidence is consistent with evidence given by Ms Pohlner, Townsend and Harris that Dr Windrum continued to engage in inappropriate conduct during 2004/2005 which was brought to the attention of Mr Court, who I have found raised it with Dr Windrum. The latter evidence is in a different category, in my view, being more proximate and being capable of being relied upon, together with other matters to terminate summarily. 100 Ms Harris' evidence was that Dr Windrum did not respect Ms Pohlner and would regularly say to her: "That woman has done nothing for Combined Pathology. That woman just upsets staff when introducing new rules and regulations. That woman was sacked by Gribbles and now they have her working here. She is not respected at that company." Such comments were clearly derogatory of Ms Pohlner. Mrs Townsend's evidence was that Dr Windrum would regularly tell jokes oblivious to the sensitivities of those in the laboratory. Mrs Townsend's evidence was that she was not good at remembering jokes, although she recalled a joke about fat people which caused Ms Mares to cry. Mrs Townsend's evidence was she spoke to Dr Windrum telling him his joke went too far and that he should be more sensitive and concerned about those around him. 101 Dr Clark's evidence was that during the time he worked as a locum with Matrix in 2002, Dr Windrum was very critical of the laboratory manager. He recalled that Dr Windrum made disparaging comments about professional capabilities of many of their professional colleagues who were working outside Matrix. Dr Clark was also the subject of criticism by Dr Windrum after he had left Matrix. This evidence falls into the same category as Ms Hagan's evidence. 102 The reality, however, as can be seen from the evidence of the respondents, was anything but pleasant. Mr Court's evidence is that as early as 2003, he raised informally with Dr Windrum, complaints he had received from staff regarding his attitude. He encouraged Dr Windrum not to annoy staff, not to make comments which were unsuitable or inappropriate and not to hassle them. He asked Dr Windrum to tone it down, otherwise he would have to possibly consider his options. Mr Court believed that he had a good relationship with Dr Windrum and thus chose to raise complaints he was receiving in informal discussions. Mr Court recognised that it was important to the business as it was heavily relying on Dr Windrum to keep him as suitably qualified pathologists were hard to come by. Mr Court's evidence is that he had to balance the complaints that he was receiving about Dr Windrum's behaviour with the need for the business to retain a fulltime pathologist. He therefore had to tolerate some aspects of what he considered to be inappropriate behaviour. He believed that he was at a severe disadvantage in these circumstances. 103 Mr Coleman submitted that the respondents' evidence did not make out a case justifying summary termination. Counsel submitted that if Dr Windrum was a poor performer and his conduct was as intolerable as suggested by (but not proven) by the respondents, then arguably more notice is required because it would be expected to take longer for him to find suitable alternative work. I reject this submission as such factors have never been a consideration in determining reasonable notice. In any event, as I have already concluded, taken as a whole, there were grounds for summary dismissal. Alleged Breach of Confidentiality 104 A further matter relied on by the respondent to summarily terminate Dr Windrum was an alleged breach of confidentiality. Dr Krausz, who worked for Matrix in 2005, but who was not called to give evidence, informed Mrs Townsend that Dr Windrum had been informing him that numbers in the laboratory were down, the business was in trouble and the management had caused this situation to happen. Mrs Townsend then contacted Mr Court and informed him of the conversation she had with Dr Krausz. The obvious difficulty with this evidence is that little weight can be attached to it. According to Mr Court's evidence, a potential buyer was doing a due diligence of Matrix at this time. 105 Dr Windrum did not deny having a conversation with Dr Krausz on 14 May 2005 regarding Matrix' numbers, and as he admitted that he often discussed Matrix' numbers with Dr Krausz, but could not recall having such a conversation on that day and denied saying that Matrix' business was going poorly. Dr Windrum accepted that he may have discussed the numbers but said that they were not confidential as they were written up on "the wall at work". Dr Windrum denied that he told Dr Krausz that the business was in trouble or going poorly. His evidence was he discussed the numbers with Dr Krausz on a weekly basis. 106 Dr Windrum saw Dr Krausz as another contractor with Matrix, although he acknowledged that his primary work was for another pathology company, Histoderm, at this time. He was not aware that a due diligence was being undertaken. Accepting Dr Windrum's evidence that he did speak to Dr Krausz about the numbers, Mrs Townsend's evidence was that the laboratory's case numbers were not "pinned on a wall in any public area at the laboratory, but were kept in the laboratory manager's office and not generally available for Matrix staff members (whether they be employees or contractors). "Although much of the evidence in respect of this allegation is unsatisfactory, Dr Windrum admitted discussing the Matrix numbers with Dr Krausz. On balance, accepting that the numbers were not pinned on a wall in the laboratory but located in Mrs Morris's office, the disclosure of this information, on balance, was inappropriate. 107 Mr Court's evidence was that by 16 May 2005, he had "had enough" of Dr Windrum. What he believed to be a breach of confidentiality on 14 May 2005 was a culmination of a series of events that led Mr Court and Dr Andrew Walker (the other Director of Matrix) to proceed with Dr Windrum's summary termination. In my view, even if the issue of breaching confidentiality was excluded, taking into account the balance of the matters relied upon, I find that the reasons for summary dismissal are made out. Denial of Procedural Fairness 108 It was contended by Mr Coleman that the applicants' contract with Matrix had operated unfairly because it failed to provide Dr Windrum with procedural fairness and/or natural justice. As was observed by the majority (Wright J President, Walton J Vice-President) in Abboud v The State of New South Wales (Department of School Education) (1999) 92 IR 32 at 51: ... The jurisdiction of the Court is to determine whether "the contract is an unfair contract" and to exercise its discretion as to the appropriate remedy. An application under s 106 does not involve an appeal from the decision of the respondent. If the contract permits the respondent to terminate the contract in a manner which is unfair, that contract may be unfair notwithstanding the right of an applicant to bring a claim before this Court alleging the contract is unfair. The finding that this unfairness may have been ameliorated or cured by the fact of the hearing before the Court involves a misapprehension of the function of the Court in determining whether or not the contract was unfair. 109 I have found Dr Windrum was warned during the course of 2004 and in 2005 by Mr Court of the need to improve his behaviour and was again advised that there was a need for him to improve his behaviour in the letter from the respondent to Dr Windrum dated 24 February 2005. Mr Court's evidence is that Dr Windrum's behaviour actually got worse from late February 2005. He abused Ms Pohlner on the afternoon of 23 February 2005, calling her a liar and a cheat and despite numerous requests and demands to keep hours more consistent with his role as the supervising pathologist at Matrix, refused to alter his general practice of leaving the laboratory on or around noon each day. This practice which had the potential to compromise the running of the laboratory, particularly as the National Pathology Accreditation Advisory Council ("NPAAC") provides for the need for supervision of pathology laboratories by a supervising pathologist. Such a pathologist is also required to be present in the laboratory during normal working hours and to be available for telephone consultations at other times. 110 The evidence of Mr Court, Mrs Townsend, Ms Harris and Ms Pohlner overwhelmingly supports the finding that Dr Windrum regularly left the laboratory around noon each day. His failure, despite requests and warnings to carry out the full range of his responsibilities provided a clear basis for summary termination of his contracts with Matrix. A further basis for warranting summary termination was Dr Windrum's continued overcharging despite this matter being brought to his attention in late 2003. This amounted to $98,725, which the respondents now do not seek to recover. Complaints regarding Dr Windrum's behaviour were brought to his attention by, in particular, Mr Court, but also by Mrs Townsend and Ms Pohlner. However, Dr Windrum failed, or refused to maintain an acceptable level of behaviour with the members at the laboratory. Such behaviour created disharmony within the workplace where he had been entrusted with the responsibility to supervise. It made it impossible for some senior staff members to continue to effectively work and communicate with him. 111 Whilst it is true that each of the above matters were not again put to Dr Windrum before the decision was made to proceed with the summary termination, the reality is that all these matters had been brought to his attention on previous occasions during the course of 2004 and in 2005. In my view, there is no basis for the Court to accept that Dr Windrum would have had any explanation or defence to advance in respect of his unacceptable behaviour, and the specific matters set out in Mrs Townsend's "Feedback" document, or if the complaints made by Ms Pohlner had been put to him. 112 Although the failure to put the allegations against Dr Windrum to him prior to summary termination was unfair and the contract which so permitted that to occur was likewise unfair in accordance with s 105 of the Act, nevertheless, the position which has been demonstrated is that despite this deficiency, there was a proper basis for the exercise of the right to summarily terminate the contract or arrangement between Dr Windrum and Matrix. 113 If I reached this conclusion, I was urged by Mr Coleman to award Dr Windrum monetary compensation because, despite Dr Windrum's misconduct as a result of Matrix's procedural failures, he was deprived of the opportunity to put before the respondents that he should not have been terminated. The approach urged by Mr Coleman must be rejected. In light of the evidence of misconduct, there is no reason to suppose that if a fair investigation had followed, Dr Windrum's contract would have continued. 114 In Schwartz v Central Sydney Area Health Service & Anor [2002] NSWIRComm 79, Marks J summarised the principles of what is fair and unfair as follows: [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. Conclusion 115 Applying these principles and notwithstanding the finding of unfairness in respect of Dr Windrum's contract, in my view, this is not a case where, as a matter of discretion, orders should be made under the section either by way of payment in lieu of notice, or of further notice beyond the three months notice provided by the respondent in respect of the variation of the contract. Having carefully reviewed all of the evidence, including that Dr Windrum overcharged the first respondent, I am satisfied no order should be made to void or vary the contract between the applicants and the respondents. It follows that the application is therefore dismissed. ORDERS 1. The summons is dismissed. 2. The applicants are to pay the respondents costs, as agreed or as assessed. --------------------------- 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.