Downer EDI Limited v Gillies [2012] NSWCA 333

Downer EDI Limited v Gillies [2012] NSWCA 333

Mr Gillies engaged in serious misconduct sufficient to justify summary dismissal. Under the contract and the principle in Shepherd v Felt and Textiles, Downer was lawfully entitled to rely on later-discovered misconduct to withhold termination and bonus payments, despite the initial payment being made in lieu of notice rather than for misconduct. As a result, Mr Gillies was not entitled to termination payments, including payment in lieu of notice or additional contractual benefits. The phantom option scheme was validly ratified, and the car loan was non-recourse and secured against the vehicle only.

Jurisdiction
Australia
Judgment Date
18 October 2012
Procedural Posture
Appeal / Court of Appeal, Decision on Appeal From Supreme Court
Outcome
Appeal allowed in part
Legal Topics
['contract Termination' 'bonuses on Termination' 'serious Misconduct' "directors' Duties" 'fiduciary Obligations' 'related Party Transactions' 'remuneration and Termination Payments']
['employment Law' 'corporations'] ['contract Termination' 'bonuses on Termination' 'serious Misconduct' "directors' Duties" 'fiduciary Obligations' 'related Party Transactions' 'remuneration and Termination Payments']

Case Brief

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Procedural Posture

Appeal / Court of Appeal, Decision on Appeal From Supreme Court

Legal Issues

  1. 1 ['Whether the respondent was entitled to termination payments and bonuses under his contract of employment given serious misconduct' "Whether the 'phantom option scheme' was valid and ratified" 'Whether Mr Gillies was indebted to the company for a car loan' 'Effect of serious misconduct discovered after termination on contractual termination payments']

Ratio Decidendi

Mr Gillies engaged in serious misconduct sufficient to justify summary dismissal. Under the contract and the principle in Shepherd v Felt and Textiles, Downer was lawfully entitled to rely on later-discovered misconduct to withhold termination and bonus payments, despite the initial payment being made in lieu of notice rather than for misconduct. As a result, Mr Gillies was not entitled to termination payments, including payment in lieu of notice or additional contractual benefits. The phantom option scheme was validly ratified, and the car loan was non-recourse and secured against the vehicle only.

Court Disposition

Appeal allowed in part

Orders

  • ['Set aside the orders of the Supreme Court made on 9 September 2011.' 'Within 14 days, appellant to file agreed orders disposing of the appeal, or if no agreement, both parties to file draft short minutes with submissions of no more than three pages including as to costs.']