FEDERAL COURT OF AUSTRALIA
Van Efferen v CMA Corporation Limited [2009] FCA 597
DAMAGES – basis for calculating damages for breach of Australian workplace agreement
Amcor Ltd v Construction, Forestry, Mining and Energy Union(2005) 222 CLR 241 referred to
Australasian Meat Industry Employees Union v Coles Supermarkets Australia Pty Ltd (1998) 80 IR 208 referred to
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 referred to
Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 referred to
Kilburn v Enzed Precision Products Pty Ltd (1988)4 VIR 31 referred to
Kucks v CSR Limited (1996) 66 IR 182 applied
Martin v Tasmania Development and Resources (1999) 89 IR 98 followed
McDonald v Parnell Laboratories (Aust) Pty Ltd (2007) 168 IR 375 referred to
Pan Foods Company Importers and Distributors Pty Ltd v Australia and New Zealand Banking Group Ltd (2000) 170 ALR 579 followed
Patterson v Middle Harbour Yacht Club (1996) 64 FCR 405 at 406 referred to
Russell v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney (2008) 176 IR 82 referred to
Russell v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney (2007) 69 NSWLR 198 referred to
Tasmania Development & Resources v Martin (2000) 97 IR 66 followed
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 applied
Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429 cited
Walker v Citigroup Global Markets Pty Ltd (2005) 226 ALR 114 referred to
Walker v Citigroup Global Markets Australia Pty Ltd (2006) 233 ALR 687 referred to
Watts v Rake (1960) 108 CLR 158 cited
Workplace Relations Act 1996 (Cth) ss 351 and 721
PETER VAN EFFEREN v CMA CORPORATION LIMITED
VID 525 of 2008
TRACEY J
4 JUNE 2009
MELBOURNE
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IN THE FEDERAL COURT OF AUSTRALIA |
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VICTORIA DISTRICT REGISTRY |
VID 525 of 2008 |
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PETER VAN EFFEREN Applicant
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AND: |
CMA CORPORATION LIMITED Respondent
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JUDGE: |
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DATE OF ORDER: |
4 JUNE 2009 |
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WHERE MADE: |
MELBOURNE |
THE COURT ORDERS THAT:
1. On or before 12 June 2009, each party file and serve draft orders giving effect to these reasons for judgment.
2. The parties have liberty to apply.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.
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IN THE FEDERAL COURT OF AUSTRALIA |
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VICTORIA DISTRICT REGISTRY |
VID 525 of 2008 |
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BETWEEN: |
PETER VAN EFFEREN Applicant
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AND: |
CMA CORPORATION LIMITED Respondent
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JUDGE: |
TRACEY J |
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DATE: |
4 JUNE 2009 |
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PLACE: |
MELBOURNE |
REASONS FOR JUDGMENT
1 Mr Van Efferen was employed in various capacities by the respondent (“CMA”) and its predecessors between 2002 and 2006. In October 2006 his employment was terminated by CMA. His application to this Court alleges that CMA, in effecting his termination, breached a term of an Australian workplace agreement (“the AWA”) and implied terms of a common law contract of employment. CMA denies that any such breaches occurred.
THE BACKGROUND FACTS
2 Most of the relevant facts are not in dispute. In January 2006 CMA entered into a contract with John Holland under which CMA was to demolish a wharf at Port Hedland in Western Australia. Demolition was to occur at the same time that another wharf was being built. The project was known as the “Dolphin Project”.
3 CMA invited Mr Van Efferen to work on the project. He accepted. He moved to Port Hedland in June 2006 and was initially employed as a Barge Master. Shortly after he commenced work he entered into the AWA with CMA. It will be necessary to return to the details of some of the terms of this AWA. Mr Van Efferen also received and signed a letter of offer dated 27 July 2006. The letter of offer was to be read in conjunction with the AWA. It dealt with matters such as the protection of CMA’s confidential information and intellectual property and the way in which Mr Van Efferen was to perform his duties. In signing the letter Mr Van Efferen acknowledged that he understood and agreed to be bound by these terms.
4 Mr Van Efferen had arranged for one of CMA’s barges to be fitted with spud poles before it left CMA’s Geelong base for Port Hedland. Spud poles were designed to stabilise the barge while demolition activities were in progress. In early August 2006 Mr Alphonse Michael, a CMA Manager, arrived in Port Hedland. He told Mr Van Efferen that the barge was to be refitted. The spud poles were to be removed and the barge stabilised by a set of anchors. Mr Van Efferen objected to this change and made his opposition plain to Mr Michael. When Mr Michael insisted that the changes be made Mr Van Efferen complied with the direction. After the refit had been completed Mr Van Efferen applied to take accrued annual leave until 9 October 2006. He did so because he feared that, if he remained, further disagreement with Mr Michael would occur. His leave application was approved and he left Port Hedland on 21 August 2006. He did not, as counsel for CMA suggested at trial, “walk off” the site.
5 While Mr Van Efferen was away Mr Jim Doyle a Project Director employed by John Holland complained to Mr Shaun Clarke, CMA’s General Manager of its Contracting Division, about the performance of certain CMA staff members at Port Hedland. In late August John Holland advised CMA that it wanted Mr Michael removed from the work site. Early in September John Holland requested that Mr Lloyd Baxter, CMA’s Marine Operations Supervisor on the Project, also leave the site. Under the contract between CMA and John Holland, John Holland had the right to require that CMA remove staff whom John Holland considered to be unsatisfactory. The contract provided for such a direction to be given in writing. CMA, however, was prepared to act on an oral complaint by John Holland in order to maintain cordial business relations with John Holland.
6 On 21 September 2006 Mr Doyle wrote to Mr Clarke. He recorded that “[f]or quite some time now we have been relaying to CMA our concerns regarding the competency of its staff engaged in marine works activities.” He referred to an incident which had occurred the previous day in which a CMA barge had collided with another barge and advised that “in the interests of safety”, CMA on-site managers had been instructed “to see to it that CMA take whatever action is necessary to ensure that the CMA floating plant in particular is under the care of competent personnel at all times.”
7 Mr Clarke responded by letter dated 26 September 2006. In that letter Mr Clarke acknowledged that CMA staff had not performed to the required standard. He said:
“In relation to the general comment on competency of our marine staff we accept that there have been incidents that we would prefer had not occurred and that, in part, these have been due to the team being unfamiliar with the equipment and each other and through working under considerable pressure to achieve the program.”
8 Mr Clarke noted that an enquiry was under way to discover whether or not CMA was at fault in relation to the incident which had prompted Mr Doyle to write to him. He continued:
“… Neverthless, we accept your concern and have taken some steps to improve the management and coordination of our marine assets. You will appreciate that your exclusion of our most experienced marine manager from site has left a significant gap in our technical expertise, and finding a replacement of similar skill and experience in the current environment will prove difficult, particularly in the short term. The resultant need to rely on less experienced staff to manage day to day operations has raised the potential for oversight.
In the immediate term, we will have an experienced marine supervisor on site on Tuesday 26th. He is familiar with the conditions, equipment and the project and will take responsibility for the coordination of our marine movements.”
9 This “experienced marine supervisor” was Mr Van Efferen. Mr Clarke had contacted him while he was on leave and requested that he curtail that leave and return to the site. Mr Van Efferen had agreed. Mr Clarke considered that Mr Van Efferen was the best qualified of CMA’s employees to undertake the role of marine supervisor.
10 As foreshadowed, Mr Van Efferen returned to the site on 26 September 2006. He commenced performing the duties of marine supervisor. By the time he had returned Mr Simon Pick had become CMA’s Project Manager on the Dolphin Project. Mr Pick lacked marine experience.
11 Soon after Mr Van Efferen’s return he had a number of disagreements with Mr Pick. The two most significant related to matters of health and safety. They involved the same barge. The first disagreement arose from a collision between a barge and a wharf which led to the barge being holed. This had occurred because tyres which Mr Van Efferen had directed should be placed around the outside of the barge to protect it in the event of a collision had been removed. The Barge Master told Mr Van Efferen that the tyres had been removed from the barge at the direction of Mr Pick. Mr Van Efferen rang Mr Pick and asked him who had ordered the tyres to be removed from the barge. Mr Pick responded with words to the effect that Mr Van Efferen knew “fucking well” that he (Mr Pick) had ordered that the tyres be removed. Mr Pick said that he had directed the removal of the tyres and accused Mr Van Efferen of “having a go” at him.
12 The second incident occurred when a power pack that supplied power to the winches on the barge broke down. The winches were used to operate the anchors. As a result, the anchors could not be used and the barge could not properly be stabilised. New parts had been ordered to repair the winches. Before they arrived Mr Pick ordered the Barge Master to use the barge to perform demolition works at the wharf. The Barge Master remonstrated with Mr Pick. While he was doing so Mr Van Efferen arrived on the scene. Mr Pick told Mr Van Efferen that he wanted to use the barge to perform demolition works. Mr Van Efferen asked Mr Pick what he would do about the winches. Mr Pick replied that he would bring the barge down to the wharf and secure it to a structure with rope so that it would remain stable. Mr Van Efferen told Mr Pick that this plan would not work and that, once the demolition started the barge would start moving because the ropes would not be strong enough to hold the barge. Mr Pick angrily disagreed and insisted that the barge be used as he had directed. The Barge Master and Mr Van Efferen agreed to act as directed by Mr Pick despite their misgivings. Mr Van Efferen directed the Barge Master to put out a static anchor which would secure the barge in the event that the ropes broke. Within 10 minutes of them being secured the ropes did, in fact, break. The barge started to drift out from the wharf. Had it not been for the static anchor the barge would have collided with a John Holland barge which was located nearby. The movement of the barge caused an excavator machine on it to swing and smash into a pre-cut concrete block on piles. As a result of these events the job was stopped for the day.
13 During this period Mr Van Efferen attended project meetings which were conducted by John Holland managers. In the course of those “toolbox” meetings Mr Van Efferen, from time to time, raised concerns about the proposed timing of certain work which he felt did not allow CMA sufficient time to conduct its barge movements. He drew attention to what he saw as safety issues relating to the barge movements. There was no evidence that John Holland objected to Mr Van Efferen expressing these opinions or as to the manner in which he spoke.
14 In early to mid October 2006 Mr Pick approached Mr Van Efferen in the car park at the Port Hedland site. Mr Pick said words to the effect that he did not think that it was working out well between him and Mr Van Efferen and that he would get Mr Van Efferen a ticket home. Mr Van Efferen correctly understood this to be a statement that Mr Pick wanted him to leave the Project. Mr Van Efferen said that, while it was Mr Pick’s right to do this, he did not understand why Mr Pick would wish to have him removed. Mr Pick did not respond. At no stage then or subsequently did Mr Pick give any specific details to Mr Van Efferen as to why it was he wished Mr Van Efferen to leave the site. No one else from CMA advised Mr Van Efferen of the reason why Mr Pick considered that he and Mr Van Efferen could not work together.
15 Mr Van Efferen returned to CMA’s Geelong site. Once there he was directed to perform general maintenance duties on a barge. He was contacted by Mr Clarke by telephone. Mr Clarke asked him what had happened at the Dolphin Project. He told Mr Clarke that Mr Pick had no marine experience and had been giving instructions to employees to do things that, on occasion, were dangerous. Mr Van Efferen told Mr Clarke that he had informed Mr Pick of this. Mr Clarke then said that he would see what he could do about it. Mr Van Efferen suggested to Mr Clarke that Mr Clarke investigate what had happened by speaking to other employees at the site. Although Mr Clarke agreed to do this he never advised Mr Van Efferen that he had done so.
16 Towards the end of October 2006 Mr Michael telephoned Mr Van Efferen at Geelong and told him that he (Mr Michael) was coming to Geelong and wanted to meet him. They met on 27 October 2006. Mr Michael advised Mr Van Efferen that it was necessary for CMA to cut costs and then said that “you’re the first and probably not the last”. Mr Van Efferen understood this to mean that he had been dismissed. This was confirmed by a letter dated 31 October 2006 from Mr Bruce Nix, the Employment Relations Manager of CMA to Mr Van Efferen in which he advised that Mr Van Efferen’s employment had been terminated because of “lack of available work your specialised field of work” (sic).
THE CONTROVERSIAL EVIDENCE
17 The principal areas of dispute between the parties relate to the circumstances in which Mr Van Efferen was removed from the Dolphin Project and was subsequently declared to be redundant. CMA’s case was that Mr Van Efferen was removed at the insistence of John Holland. Had he not been removed John Holland would have terminated its contract with CMA or not provided CMA with further work. Once Mr Van Efferen had been removed from the Dolphin Project and had returned to Geelong there was no other work to which he could be assigned. At the time at which he was removed from Project Dolphin CMA had pending two other tenders for marine demolition work. By mid October CMA was aware that it had not been successful in these tenders and it could not afford to employ Mr Van Efferen on purely maintenance work. His employment was terminated because he had become redundant.
18 Mr Van Efferen on the other hand, maintained that there was no justification for his removal from the Dolphin Project. He contended that his disputes with Mr Pick related to matters of health and safety and that Mr Pick resented his interventions. Mr Pick had persuaded Mr Clarke to remove Mr Van Efferen from the Dolphin Project. There had been no complaint by John Holland about Mr Van Efferen’s work performance or any demand by John Holland that he be removed from the project.
19 CMA’s principal witness was Mr Clarke. Mr Clarke deposed, in his first affidavit, that “around October 2006 formal verbal complaints were made to [him] about Mr Van Efferen’s conduct by [Mr Doyle], and informally by the Project Manager, Mr Simon Pick.” Mr Clarke said that the complaints “were generally that Mr Van Efferen was argumentative, divisive and unco-operative and as a result the team’s productivity and project performance was suffering.” Mr Pick asked Mr Clarke to direct that Mr Van Efferen be removed from the project because Mr Van Efferen “was uncooperative and the client had requested his removal.” Mr Clarke said that he considered that it was necessary to remove Mr Van Efferen “in order to protect the business relationship with the client and to ensure the effective operation of the Project.” Mr Clarke telephoned Mr Van Efferen while Mr Van Efferen was still at Port Hedland and told him that Mr Pick and the client couldn’t work with him “and therefore we can’t keep you at Port Hedland.” Mr Van Efferen responded by raising examples of disagreements on marine issues with John Holland. Mr Clarke said that whether Mr Van Efferen was right or wrong was not to the point. John Holland did not want him on the site. Following that discussion Mr Clarke spoke to Mr Pick. He asked Mr Pick whether he (Mr Pick) was sure that he had not overreacted by asking that Mr Van Efferen be removed from the project. After speaking to Mr Pick Mr Clarke said that he considered that the decision to remove Mr Van Efferen was correct.
20 In a later affidavit Mr Clarke deposed that, following Mr Van Efferen’s return to the project in late September 2006, he had telephone conversations with Mr Doyle about the performance of work at Port Hedland. He attributed to Mr Doyle a complaint that CMA marine staff were causing delays on the project and that: “[y]our marine supervisor is uncooperative.” Mr Clarke also said that Mr Pick had complained to him about Mr Van Efferen on a number of occasions. In October Mr Pick told Mr Clarke that Mr Van Efferen “argues with John Holland and he argues with me”. Mr Pick asked Mr Clarke to remove Mr Van Efferen from the project. Mr Clarke then said:
“I did not agree with John Holland’s request for Mr Van Efferen to leave the Dolphin Project. My view was that John Holland was behind schedule in their own work and were not managing their own logistics efficiently and that CMA’s management of marine activities was not the sole source of the problems. However if he was not removed John Holland could have exercised its contractual right to direct CMA to remove Mr Van Efferen.” (Emphasis added).
21 Under cross-examination Mr Clarke said, for the first time, that he had had a direct request from John Holland to remove Mr Van Efferen from the site within days of Mr Van Efferen’s return to Port Hedland in late September 2006. The following exchanges took place between counsel for Mr Van Efferen and Mr Clarke:
“Do you have any explanation why it [the September request] has been omitted from your two affidavits? ---Well, you know, I said in the affidavits that there were complaints from the client about the competency of the staff. I had discussions with the project manager at the time. The project manger at the time believed that Mr Van Efferen needed to be removed from the site.
That’s your explanation for the omission? ---I thought it was reasonably clear.
So you are saying that in September, you stood up to John Holland and said, “No, I’m not going to remove him from the site”?---Yes, and did it subsequently, on at least one other occasion.
I see. You simply want to distance yourself from the fact that the source of Mr Van Efferen’s removal from the site was Mr Pick’s gripe of Mr Van Efferen’s behaviour, don’t you? That’s why you raised this idea of John Holland?---No, I think John Holland, in correspondence, had pointed that out.
Oh, you’ve got correspondence?---Yes, I think it’s attached to the affidavit. Not specifically to Mr Van Efferen, but the fact that they had complaints about the marine supervision. They did remind us it was a serious matter.”
22 In the course of further questioning it emerged that the correspondence to which Mr Clarke was referring was Mr Doyle’s letter to Mr Clarke dated 21 September 2006 and Mr Clarke’s response dated 26 September 2006: see above at [6]-[9]. At the time at which the correspondence occurred Mr Van Efferen had not been on the Project Dolphin site for over a month. John Holland directed no complaint against him. Mr Clarke responded by advising John Holland that CMA would seek to remedy the acknowledged deficiencies in the performance of its staff by sending Mr Van Efferen to Port Hedland. It is highly unlikely that he would have done this had Mr Doyle or some other representative of John Holland criticised Mr Van Efferen’s work performance and demanded his removal. It is also most unlikely that Mr Doyle would have sought the removal of Mr Van Efferen a matter of days after Mr Van Efferen had returned to Port Hedland.
23 Even on Mr Clarke’s own evidence he had only received the most general complaints from John Holland as to Mr Van Efferen’s conduct. Most of the statements about Mr Van Efferen’s performance to which Mr Clarke referred in his affidavits had been conveyed to him second hand by Mr Pick. They led Mr Clarke to believe that John Holland’s dissatisfaction with Mr Van Efferen “could” lead John Holland to make a written request for Mr Van Efferen’s removal and a fracturing of the relationship between CMA and John Holland. Mr Clarke’s evidence on this crucial issue was unconvincing. The exchange which I have quoted (above at [21]) strongly suggests that Mr Clarke was straining to justify his decision to remove Mr Van Efferen from the Dolphin Project by reference to complaints and demands made by John Holland when, in fact, those entreaties were coming from Mr Pick with whom Mr Van Efferen had fallen out over incidents such as the holing of the barge and the failed attempt to secure it by the use of ineffective ropes.
24 The evidence satisfies me that Mr Pick was the source of the complaints against Mr Van Efferen. It was Mr Pick who suggested that Mr Van Efferen was argumentative, divisive and uncooperative to the point where CMA’s productivity and performance on the project were suffering. This is the type of comment one would expect to have been made by a CMA manager rather than a John Holland representative. It was Mr Pick who told Mr Clarke that John Holland was dissatisfied with Mr Van Efferen. It was Mr Pick who asked Mr Clarke to remove Mr Van Efferen. Mr Clarke accepted Mr Pick’s criticisms of Mr Van Efferen and agreed to Mr Pick’s request that Mr Van Efferen be removed from the project.
25 I am fortified in reaching this conclusion by the fact that, despite acknowledging the importance of maintaining a written record of significant complaints against CMA staff by a client, CMA was unable to produce any written record of Mr Clarke (or anyone else) receiving any complaint (formal or otherwise) from John Holland about Mr Van Efferen. Neither Mr Doyle nor Mr Pick was called to give evidence to support Mr Clarke’s account.
FAILURE TO OBSERVE THE GRIEVANCE PROCEDURE
26 Mr Van Efferen submitted that CMA breached clause 2.10 of the AWA thereby causing him loss and damage. He contended that he is entitled to recover that loss and damage pursuant to s 721 of the Workplace Relations Act 1996 (Cth) (“the Act”).
27 CMA contended that the grievance procedure had no application in the circumstances which led to Mr Van Efferen being removed from the Dolphin Project and that it had the right, under the AWA, to require him to move back to Geelong.
28 The AWA was entitled “CMA Corporation Limited Maintenance Supervisor Australian Workplace Agreement 2006 - 2009.” By clause 1.3 it provided that the AWA was to be read in conjunction with the Letter of Offer which was signed by Mr Van Efferen. Clause 1.5 provided that the agreement had a term of 3 years from the date on which it was lodged with the Office of the Employment Advocate. The objectives of the agreement were identified in clause 1.6. They included:
· A positive relationship between CMA and its employees;
· A positive attitude and acceptance by all of their responsibility for health, safety and welfare;
…
· Effective working relations with all clients.
By clause 2.1(a) it was provided that:
“…
The Employee must perform all work and follow all instructions CMA reasonably requires of them (sic), provided they are within the limits of the Employee’s skills, competence, training, qualifications, classification and statutory requirements.
The Employee must perform work at any location as CMA shall from time to time reasonably require.
The Employee must work in a safe manner at all times recognising that the lack of safe work practices impact on other CMA employees, sub contractor (sic), client employees and others.
…
The Employee must comply with the Avoidance of Disputes Grievance procedure provided for in this Agreement.
The Employee must comply with all client and Site or Project terms and conditions.
The Employee must comply with all CMA Policies, Procedures and Code of Conduct, as amended from time to time.
The Employee must comply with Site or Project Policies, Procedures and Codes of Conduct as amended from time to time.”
29 Clause 2.1(b) provided that the agreement could be terminated by either party on the giving of prescribed periods of notice. CMA could terminate the contract by paying wages in lieu of the prescribed notice period. Provision was also made for summary dismissal for serious misconduct. Separate provision was made, in clause 2.7, for CMA to contribute to a redundancy trust fund from which payment was to be made in the event of an employee becoming redundant. There was, however, no specific provision in the AWA that it could be terminated in the event that the employee had become redundant.
30 The grievance procedure which Mr Van Efferen complains was breached by CMA is contained in clause 2.10 of the AWA. It provides:
“GRIEVANCE PROCEDURE
CMA Grievance Procedure is designed to deal with CMA’s concerns about the behaviour of its employees. It operates as follows:
Step 1 In the first instance, the Manager and the Employee concerned will discuss the issue.
Step 2 If the concern continues or another concern arises, the Manager will formally counsel the Employee.
Step 3 If concern about the Employee continues, a more senior manager of CMA will formally warn the Employee.
Step 4 If the concern continues the Employee’s employment may be terminated.
If the concern is serious enough, the procedure need not begin at step 1, but at a higher step.
At steps 2 to 4, formal counselling and warnings will be in writing and will advise the Employee of the:
· behaviour deemed to be unsatisfactory;
· action to be taken to correct the situation;
· consequence of continuing the unsatisfactory behaviour;
· assistance available to the Employee to help him or her meet the required performance; and
· a review date for reassessing progress in the Employee’s performance.
The Employee will be given the opportunity to record his or her version of the situation. At any stage the Employee may have a representative present during any discussions. Any dispute arising out of this procedure will be dealt with in accordance with the “Employee Grievance Procedure” below.
Nothing in this clause affects the right of CMA to summarily dismiss the Employee for conduct justifying such action.”
31 It was followed by another clause which enabled employees to raise their concerns with CMA and prescribed a procedure for dealing with such concerns.
32 It is common ground that CMA made no attempt to give effect to clause 2.10 at any stage of its dealings with Mr Van Efferen.
33 As is often the case with industrial agreements drafted by non-lawyers, the language of the AWA lacks the precision one would expect to find in a commercial contract. The looseness of the language of clause 2.10 has made it possible for the parties to advance radically different submissions as to its proper construction. Mr Van Efferen contended that clause 2.10 imposed a mandatory obligation on CMA to observe the staged process prescribed by the clause once it had developed a concern about his conduct. CMA, on the other hand, submitted that the occasion to apply the prescribed procedures only arose once CMA had decided to take disciplinary action against an employee by reason of its concerns about the employee’s behaviour. Even then, CMA was disposed initially to argue that the clause imposed no mandatory obligation on CMA to apply the procedures.
34 In dealing with the construction of awards in Kucks v CSR Limited (1996) 66 IR 182 at 184 Madgwick J observed that:
“It is trite that narrow or pedantic approaches to the interpretation of an award are misplaced. The search is for the meaning intended by the framer(s) of the document, bearing in mind that such framer(s) were likely of a practical bent of mind: they may well have been more concerned with expressing an intention in ways likely to have been understood in the context of the relevant industry and industrial relations environment than with legal niceties or jargon. Thus, for example, it is justifiable to read the award to give effect to its evident purposes, having regard to such context, despite mere inconsistencies or infelicities of expression which might tend to some other reading. And meanings which avoid inconvenience or injustice may reasonably be strained for. For reasons such as these, expressions which have been held in the case of other instruments to have been used to mean particular things may sensibly and properly be held to mean something else in the document at hand.”
35 This passage was quoted with approval by two members of the High Court in Amcor Ltd v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241 at 271 (Kirby J), 282-3 (Callinan J). In Australasian Meat Industry Employees Union v Coles Supermarkets Australia Pty Ltd (1998) 80 IR 208 at 212 Northrop J expressly agreed with this statement of principles and held that it had even stronger application to certified agreements than it did to awards.
36 In my view, these principles have application to the construction of Australian workplace agreements and, in particular, to provisions, like clause 2.10, which are expressed to apply generally to all employees of the employer (although, of course, only binding on the employer and the employee party to the particular agreement).
37 Guidance as to the construction of industrial instruments may also be obtained by reference to principles which courts apply to the construction of commercial contracts. Commercial contracts should, as Kirby J held in Pan Foods Company Importers & Distributors Pty Ltd v Australia and New Zealand Banking Group Ltd (2000) 170 ALR 579 at 584 “be construed practically, so as to give effect to their presumed commercial purposes and so as not to defeat the achievement of such purposes by an excessively narrow and artificially restricted construction.” An interpretation which accords with business common sense will be preferred to one which does not: see Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429 at 437.
38 In determining whether a commercial document imposes contractual obligations regard is had to the intention of the parties: would a reasonable person conclude that the person making the alleged binding promise intend to be contractually bound by that promise. In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 179 the High Court summarised the position as follows:
“It is not the subjective beliefs or understanding of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe … That, normally requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.”
39 Clause 2.10 is, as it says, designed to deal with “concerns” which CMA may, from time to time have about the behaviour of its employees. Those concerns may arise from some innocent act of the employee which leads CMA mistakenly to believe that some misconduct has occurred. At the other end of the spectrum concern may be raised by blatant misconduct which occurs in the presence of a supervisor. Between these extremes fall many forms of conduct which have the potential to give rise to concern on the part of the employer. They include matters such as unapproved absences from duty, the failure to meet production targets, the performance of work in a manner which might compromise the health and safety of other employees, failure to contribute as part of a team and many more possibilities. Clause 2.10 is intended to deal with all such situations. Step 1 would, for example, be of use where CMA suspected that an employee had engaged in some misconduct but was not sure. The discussion between the manager and the employee may set the manager’s mind at rest. Step 1 might also be useful where an employee is thought not to be working productively. If the issue is raised with the employee the employee may be able to offer a satisfactory explanation to CMA such as that his work is being impeded by some work-related injury. Serious misconduct such as abuse of a supervisor or actions which jeopardise the health and safety of other employees can be dealt with by immediate counselling under Step 2. The subsequent steps ensure that the employee knows that he or she is on notice that any repetition will place his or her continued employment in jeopardy. Extreme misconduct may lead to summary dismissal.
40 Clause 2.10 can be engaged even when CMA has not determined that disciplinary action against the employee is warranted. The prefatory words of the clause make no mention of disciplinary action and do not condition its application on a decision by CMA that disciplinary action is warranted. The adoption of the term “grievance procedure” suggests that the clause was intended to have application to a wider range of “concerns” than those which have disciplinary implications. This is made plain by a reading of the clause as a whole. Its language confirms that it has application if CMA has a concern about an employee’s behaviour and wishes to ascertain whether the employee has, in fact, done anything wrong. CMA may also harbour concerns about behaviour which it is satisfied amounts to misconduct but, in respect of which, it considers it appropriate to do no more than draw the matter to the employee’s attention and request or direct that the conduct not be repeated. The word “grievance” is, of course, apt also to embrace CMA’s reaction to conduct by an employee which CMA considers does or may warrant disciplinary action.
41 CMA argued that, even if clause 2.10 had potential application, in the circumstances of the present case CMA was under no obligation to observe its terms. This was so, it was contended because the clause did not impose any contractual obligations on it unless and until it had determined to take disciplinary action against the employee.
42 The terms in which industrial instruments are drafted often require a distinction to be drawn between aspirational and promissory statements. In accordance with the objective theory of contract expounded in Toll, a provision in a document proffered by an employer, will be treated as promissory in nature if the hypothetical, reasonable, potential employee to whom the document is presented would have concluded that CMA intended to be contractually bound to follow the procedures, outlined in it if CMA developed any concerns about the behaviour of the employee.
43 Whether or not he or she would have so concluded will depend on a consideration of the terms of the clause, the surrounding circumstances known to the parties and the nature of the arrangement which is being entered into. In my view clause 2.10 does impose an obligation on CMA to proceed at least as far as step 1 in a case such as the present.
44 The clause appears in a particular type of contract which is recognised and regulated by statute. It is an agreement which is intended to govern the employment relationship of an employer and an employee. It provides a form of protection to an employee whose conduct has, for any reason, given the employer cause for concern. It is designed to ensure that the employee is informed of the nature of those concerns and has the opportunity to disabuse the employer or to have the opportunity (in most instances) of rectifying any shortcomings which have given rise to the employer’s misgivings.
45 Although the clause does not commence with a statement of obligation it provides that it will operate in a particular manner. Then follows a series of sequential steps which set out what CMA’s managers “will” do in prescribed circumstances. Prejudicial action will only be taken if the employee fails, when provided with the opportunity, to alleviate CMA’s professed concern. A reasonable employee would rightly conclude that CMA was committing itself to implementing these protective measures if the need arose. That employee would not conclude that the benefit of clause 2.10 would be dependent on the favourable exercise of CMA’s unfettered discretion.
46 The making and operation of Australian workplace agreements was provided for in Division 4 of Part 8 of the Act. Section 351(a) of the Act provided that such an agreement bound the employer party. A reasonable person in the position of the employee who was invited to enter into such an agreement would, therefore, rightly assume that terms which said that the employer would, in prescribed circumstances, take certain action would require the employer to take such action if those circumstances arose in the course of the employer/employee relationship.
47 CMA contended that, if clause 2.10 were to be construed as imposing mandatory obligations on it whenever it had a concern about the behaviour of an employee, no matter how trivial that concern was, this would lead to absurd results: its managers would be forced to waste a large amount of their time in pointlessly working their way through the various steps whenever some minor concern arose in respect of any employee.
48 This sensitivity is misplaced. The clause must be read and applied in a sensible and practical manner. The type of “concerns” to which it applies will only arise when the employee exhibits some type of behaviour which causes CMA anxiety as to the impact of that behaviour on some aspect of its operations. A trivial concern about the employee occasionally arriving a minute or two late for work would not, for example, invoke clause 2.10. Even if it did the matter could be resolved by a short discussion under step 1. No commercial absurdity arises.
49 In the alternative, CMA argued that it was not obliged to observe clause 2.10 because it did not have a concern about Mr Van Efferen’s conduct. The relevant concern was that of John Holland. Once CMA became aware that John Holland considered that Mr Van Efferen was unco-operative and was impeding progress on the wharf project it had merely exercised its contractual rights to require him to work elsewhere, thereby pre-empting a formal written demand by John Holland that he be removed from the site.
50 This aspect of CMA’s defence must fail because, as I have already held, it was Mr Pick and Mr Clarke, both senior managers of CMA, not John Holland, who were dissatisfied with the manner in which Mr Van Efferen was performing his duties. Mr Pick and/or Mr Clarke should have taken these matters up with Mr Van Efferen before he was required to leave the site and return to Geelong where there was no certainty that any ongoing work was available for him. The fact that CMA had the right, under clause 2.1 of the agreement to nominate an alternative location at which Mr Van Efferen was to “perform work” did not mean it could avoid its obligations under clause 2.10. In any event, he was not sent to the Geelong site to perform work. He was sent there because CMA perceived it to be a convenient alternative to Port Hedland and struggled to find anything useful for him to do once he was in Geelong. At best it was a holding operation pending CMA discovering whether or not it had been successful in obtaining work on a new project to which Mr Van Efferen might be deployed.
CAUSATION
51 Mr Van Efferen’s first cause of action is founded on s 721 of the Act. Section 721(1) provided that:
“A party to an AWA who suffers loss or damage as a result of a breach of the AWA by the other party may recover the amount of the loss or damage in an eligible court.”
It is, therefore, necessary for Mr Van Efferen to show that CMA’s breach of clause 2.10 was the proximate cause of the loss and damage which he seeks to recover: cf S & Y Investments (No 2) Pty Ltd (In Liq) v Commercial Union Assurance Company of Australia Ltd (1986) 85 FLR 285 at 291-294. Whether the breach was a proximate cause of Mr Van Efferen’s loss and damage is a question of fact.
52 CMA argued that, even if it had concerns about Mr Van Efferen’s conduct and it was obliged to give effect to clause 2.10, there was no causal link between its failure to observe the requirements of clause 2.10 and the loss and damage suffered by Mr Van Efferen. CMA submitted that the causal link between the breach and damage had been or would have been broken by a series of anticipated events. They were:
· Had CMA not removed Mr Van Efferen from the project, John Holland would have done so.
· Mr Van Efferen would not have responded to counselling by CMA about his work performance and John Holland would have directed his removal.
· As a result of a restructuring of CMA’s management, which occurred shortly after Mr Van Efferen’s departure, his former position was made redundant.
· Had CMA been successful in tendering for other marine projects, Mr Van Efferen could have been deployed to one of those projects at any time.
53 As I have already held, there is no evidence to support the contention that John Holland was dissatisfied with Mr Van Efferen’s performance of his duties and no complaint was made by John Holland to CMA about Mr Van Efferen’s conduct. There was, therefore, no reason to expect that John Holland would have required CMA to have removed him from the site. On the contrary, Mr Van Efferen’s professional expertise and his attention to matters of safety would have made it likely that John Holland would have wished to retain his services. It was, for example, Mr Pick’s decision to secure a barge by ropes rather than anchors which nearly led to a collision between the CMA barge and a barge owned by John Holland. Mr Van Efferen had cautioned against the use of ropes.
54 The suggestion that any counselling, conducted by CMA under clause 2.10, would have been ineffective in changing Mr Van Efferen’s approach to his duties must be rejected. The proposition assumes that there were some shortcomings on the part of Mr Van Efferen which would have attracted adverse attention by John Holland and assumes that CMA’s professed concerns were warranted. They were not. Mr Van Efferen performed his duties in a professional manner which did not attract the adverse attention of John Holland. His dispute with Mr Michael in august 2006 about the removal of spud poles arose from his concern about the effect this change would have on the stability of the barge. Mr Van Efferen’s insistence on the maintenance of proper safety regimes stands in stark contrast with Mr Pick’s willingness to take risks in order to get on with the job. It is highly unlikely that John Holland would have found fault with Mr Van Efferen in relation to such issues.
55 The evidence does not support CMA’s contention that Mr Van Efferen would have been unlikely to respond positively to counselling had it invoked clause 2.10. I do not consider it likely that Mr Van Efferen would have failed to heed CMA’s wishes in relation to his future conduct. He enjoyed the work he was doing and the material benefits which he received for doing it. He wished to continue doing this work. No comparable positions were available elsewhere within the CMA organisation or, apparently, elsewhere. It is also to be borne in mind that, although Mr Van Efferen objected to certain decisions made by Mr Michael and Mr Pick and voiced his concerns about them, he nonetheless, complied with the decisions when Mr Michael and Mr Pick insisted that they be implemented. This is not the response of a person who is prone to ignoring the wishes of his supervisors.
56 After Mr Van Efferen had been removed from the project CMA did make some changes to its management structure. These changes did not, however, render the position which he formerly held redundant. He was replaced by Mr Steven Marks. There was a continued need for someone with marine experience to perform the duties which Mr Van Efferen had undertaken. Mr Marks was appointed to take over the role previously performed by Mr Van Efferen. He was designated the Marine Operations Supervisor. He remained on the project in this role until December 2007, a few months before the project was completed. There is, then, no foundation for CMA’s assertion that the marine supervisor’s position became redundant shortly after Mr Van Efferen was removed.
57 Had CMA been successful in tendering for other marine projects during the life of the Dolphin Project it is possible that it might have determined to transfer Mr Van Efferen to one of those other projects. In the event CMA did not secure any other marine project during the life of the Dolphin Project. There was, as a result, no alternative project on which Mr Van Efferen might have been engaged. He was, in fact, ultimately dismissed because CMA had no alternative work to offer him.
58 There is reason to expect that, had Mr Van Efferen not been removed from the Dolphin Project, he would have continued to perform his duties on that project at an objectively acceptable standard. There was a need for CMA to have somebody with marine experience on the site throughout the project. CMA had few employees with such experience. It presented Mr Van Efferen to John Holland as “an experienced marine supervisor” who would rectify problems identified by John Holland. Mr Clarke considered that Mr Van Efferen was performing his duties satisfactorily and did not accept that complaints which Mr Pick attributed to John Holland had substance. It was not suggested to Mr Van Efferen that it was likely that he would have resigned and gone elsewhere prior to the completion of the project. The evidence satisfies me that, had Mr Pick not urged Mr Clarke to remove Mr Van Efferen from the project and had Mr Clarke not yielded to Mr Pick’s demands, Mr Van Efferen would have continued to perform the duties of marine supervisor until the project was completed.
59 Mr Pick clearly resented Mr Van Efferen’s periodic objections to instructions given by him. He particularly objected to Mr Van Efferen querying his instructions where third parties, such as the barge master, were involved. The problem was compounded when subsequent events demonstrated that Mr Van Efferen’s objections were warranted. From Mr Pick’s perspective Mr Van Efferen’s querying of his (Mr Pick’s) instructions demonstrated that Mr Van Efferen was an uncooperative and argumentative employee whose actions undermined Mr Pick’s authority as project manager on the site.
60 In these circumstances, Mr Pick was obliged, by clause 2.10 (step 1) to discuss his concerns with Mr Van Efferen. He did not do so. Had the discussion resolved the issues raised by Mr Pick that would have been an end to the matter. Had Mr Van Efferen continued to question Mr Pick’s decisions and had Mr Pick been concerned about this he would have been required, under step 2, formally to counsel Mr Van Efferen. If Mr Van Efferen had, thereafter, desisted, matters would have rested there. If not then a more senior manager, presumably Mr Clarke, would have been required, by step 3, to consider the matter and, if so minded, formally warn Mr Van Efferen that his employment would be in jeopardy if his impugned conduct continued. At each stage in the process it would have been necessary for the CMA representative to articulate his concerns about Mr Van Efferen’s conduct and to give Mr Van Efferen the opportunity of explaining why he had acted in a particular way. Had the process continued as far as step 3 he would have been able to explain to a manager, more senior to Mr Pick, why he had objected to particular instructions given by Mr Pick and the senior manager may well have concluded that subsequent events had vindicated Mr Van Efferen.
61 It is clear that such a process would have taken some time and would not, inevitably, have led to the termination of Mr Van Efferen’s employment. The process would have taken longer than the few weeks which elapsed between Mr Van Efferen’s removal from Port Hedland and the termination of his employment when he was in Geelong. At the time at which he was directed to leave Port Hedland Mr Clarke well knew that there was no gainful employment for Mr Van Efferen in Geelong and that CMA’s capacity to offer further work to him depended on it being successful in obtaining certain tenders. When it failed to obtain those tenders it had no gainful work to offer Mr Van Efferen and it terminated his employment.
62 Mr Van Efferen’s AWA was expressed to be operative for a period of three years from the date on which it was lodged with the Office of the Employment Advocate. The contract was terminable for serious misconduct which warranted summary dismissal and otherwise by the giving of prescribed periods of notice. Had CMA not breached clause 2.10 the contract would not have been terminated and Mr Van Efferen would have continued working at Port Hedland until the completion of the Dolphin project in April 2008. The breach of clause 2.10 was a proximate cause of Mr Van Efferen’s loss of the salary and other benefits to which he was entitled as the marine supervisor for CMA on the Dolphin Project.
DAMAGES
63 Although s 721(1) of the Act provides that a person who suffers loss or damage as a result of a breach of an AWA may recover that loss or damage in curial proceedings, the provision is silent as to the basis on which such loss and damage should be calculated. Mr Van Efferen submits that, because AWAs are statutory contracts, damages should be calculated as they would be in respect of any breach of contract. The applicant should be placed in the same situation, as far as money may do it, as if the contract had been performed: Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 80 (Mason CJ and Dawson J), 98-9 (Brennan J), 116 (Deane J) and 148 (Gaudron J). In appropriate cases damages could be calculated by reference to what the applicant was entitled to expect by way of performance by the respondent and the losses incurred when the respondent failed to comply with its contractual obligations: Amann Aviation, at 91-2.
64 Where an employer wrongfully terminates an employment contract which has a fixed term, thereby causing damage to an employee, damages are normally calculated on the basis that the employee would have enjoyed the benefits of the contract for the remainder of its term: see Kilburn v Enzed Precision Products Pty Ltd (1988)4 VIR 31 at 33; Patterson v Middle Harbour Yacht Club (1996) 64 FCR 405 at 406; Martin v Tasmanian Development and Resources (1999) 89 IR 98 at 120-1. The employee is under an obligation to mitigate his loss by seeking to obtain alternative remunerative employment. Although the AWA had a three year term, Mr Van Efferen only sought damages until CMA’s work on the Dolphin Project ceased.
65 Mr Van Efferen submitted that, had CMA complied with clause 2.10, he would not have been removed from the Dolphin Project and would have continued to perform his duties as marine supervisor until the project was completed on 15 April 2008. He submitted that damages should be assessed by reference to what he would have earned during this period, less the amount which he had earned since the termination of his employment. Alternatively, Mr Van Efferen contended that the same measure of damages should be awarded if a “loss of expectation” or “loss of chance” analysis of the kind deployed in Amann Aviation was applied.
66 CMA’s argument on damages seemed to proceed on the assumption that compensatory damages were not available. It resisted the “loss of chance” claim on the basis that Mr Van Efferen did not have a contract for a specific term and that no question of the possibility of renewal of the contract arose: see McDonald v Parnell Laboratories (Aust) Pty Ltd (2007) 168 IR 375 at 397-8. In this context it relied on the arguments, outlined above at [52] which, it contended, supported the view that there was no causal nexus between any contravention of clause 2.10 and the damage alleged by Mr Van Efferen.
67 Mr Van Efferen gave evidence about his attempts to obtain alternative employment between October 2006 and April 2008. He had found it impossible to obtain maritime work but had been prepared to take whatever work he could get. He was able to obtain some short term employment. His evidence was not seriously challenged. I accept it. CMA has failed to discharge the onus which fell on it to prove that Mr Van Efferen failed to mitigate his loss: see: Watts v Rake (1960) 108 CLR 158.
68 There is no reason, in my opinion, why Mr Van Efferen’s damages should not be assessed on the normal contractual basis. He had a contract for a three year term which did not expire until mid-2009. He confines his claim to the period of the Dolphin Project.
69 The amount Mr Van Efferen would have earned during the life of the project would have been $313,007.47 in salary plus $14,284 in superannuation. This is a total of $327,291.47. From this figure must be deducted the amount which Mr Van Efferen earned in alternative employment during the relevant period. That figure was $22,525.94. His loss was, therefore, $304,765.53.
70 The calculations which lay behind these figures were explained by Mr Van Efferen and were not challenged by CMA.
71 When Mr Van Efferen’s contract of employment was terminated CMA paid him $12,976.98 being redundancy payments and other accrued entitlements. He submitted that this sum ought not to be subtracted from the damages to which he claimed to be entitled because of the likelihood that he would have been made redundant by CMA after completion of the Dolphin Project. I accept this submission.
72 For the reasons already given, I consider that, but for the contravention of clause 2.10 by CMA, Mr Van Efferen was likely to have remained in his position at Port Hedland until the completion of the Dolphin Project. Given the lack of alternative employment prospects in his specialist field, I consider that there was only a remote chance that Mr Van Efferen would have terminated the contact before 15 April 2008. Given the shortage of people who had the same level of experience as Mr Van Efferen I consider there was only a slight chance that CMA would have taken the initiative and terminated the contract. I consider it appropriate to allow a discount of 10% to deal with the contingency that the contract might have validly been terminated prior to April 2008. Subject to some further matters with which I will deal later in these reasons damages of $274,288.00 should be awarded.
73 The award of compensatory damages for breach of contract protects the expectation interest of the innocent party: Amann Aviation at 80. That expectation is that the contract would be performed according to its terms. Mr Van Efferen sought to characterise the present case as one involving a “loss of chance” because he had lost the opportunity to obtain benefits which would have resulted from his continued employment with CMA. These submissions led to what I regard as an unprofitable debate about whether damages could and should be awarded in the present case on the alternative basis of a “loss of chance”.
74 In Amann Aviation, the plaintiff obtained damages against the Commonwealth for breach of a three year contract under which the plaintiff was to provide aerial coastal surveillance. Damages were awarded on the conventional basis. Additional damages were also awarded to compensate the plaintiff for a loss of opportunity to obtain a further contract after the repudiated contract had run its term. The plaintiff succeeded. The court considered that there was “a strong prospect of renewal” (at 94): it would have had the benefit of three years experience and any competitor would effectively have been starting from scratch. It was this latter award of damages that attracted the terms “loss of a chance” or “lost opportunity”.
75 Full Courts of this Court have applied the “loss of a chance” approach to the assessment of damages for breaches of employment contracts. In Tasmania Development and Resources v Martin (2000) 97 IR 66 the Full Court upheld the trial judge’s decision to award damages to reflect the applicant’s loss of the prospect that his contract would be renewed even though he had no legal right to renewal. The applicant was employed by a statutory authority. He was employed on a three year contract. After about 18 months his employment was terminated on the grounds of redundancy. The trial judge found that the contract had been terminated by the statutory authority in breach of a provision which required that there be consultation between employer and employee before an employee was terminated for redundancy. The trial judge held that, had the contract not been wrongly terminated, the employee would have enjoyed its benefits for the remainder of the three year term. He allowed damages for that period. He also allowed a further sum to compensate the employee for loss of the chance of obtaining a fresh contract at the end of the term of the existing contract.
76 In Walker v Citigroup Global Markets Australia Pty Ltd (2006) 233 ALR 687 it was held that damages could be assessed on a “loss of a chance” basis where a contract of employment had been repudiated before the applicant had commenced to perform duties under it. The Full Court considered that, on the evidence, had Mr Walker been permitted to commence work under the contract, it was to be expected that he would not have left his employment voluntarily or for cause within a five year period. Damages were assessed on this basis with a 25% discount applied to take account of the possibility that the contract might have been terminated during the five year period.
77 More recently, in McDonald v Parnell Laboratories (Aust) Pty Ltd (2007) 168 IR 375 Buchanan J cautioned that the award of damages for “loss of a chance” could not occur, consistently with Amann Aviation, in the absence of a fixed term contract and evidence supporting the possibility that the contract might be renewed.
78 In the present case Mr Van Efferen did not seek to suggest that his AWA was likely to be renewed by CMA once it expired. He did not claim any monetary loss on the ground that he had an expectation of renewal. There is, therefore, no occasion to consider an award of damages to Mr Van Efferen for such a lost opportunity. The lost opportunity to which he referred in his submissions appears, on analysis, to be no more than the frustration of his expectation that he would continue working, under his existing contract, at least until the completion of the Dolphin Project.
IMPLIED TERMS
79 The second cause of action pleaded by Mr Van Efferen alleged breach, by CMA, of implied terms in his contract of employment. Those implied terms were that:
· CMA, as the employer party, would not conduct itself in a manner calculated or likely to destroy the relationship of trust and confidence between the parties: see Russell v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney (2007) 69 NSWLR 198 at [126]-[128];
· The parties have a duty to act in good faith towards each other, that is, to exercise prudence, caution and diligence or due care to avoid or minimise adverse consequences to the other party: see Russell at [117]-[119].
80 The question of whether or not such terms may be implied in contracts of employment is one of some controversy on which the High Court has yet to make a definitive pronouncement: see Riley, J, “The Boundaries of Mutual Trust and Good Faith” (2009) 22 Australian Journal of Labour Law 73; Riley, J, “Mutual Trust and Good Faith: Can Private Contract Law Guarantee Fair Dealing in the Workplace” (2003) 16 Australian Journal of Labour Law 1. Given my findings in relation to the breach of clause 2.10 it is not necessary that I embark on a detailed examination of this alternative basis of Mr Van Efferen’s claim. I would, however, venture some short observations.
81 Mr Van Efferen submitted that the terms ought to be implied, not in the AWA to which he was a party, but in the common law contract of employment which was evidenced by his acceptance of the letter of offer dated 27 July 2006. That letter recorded very few terms of the contract. It dealt mainly with the protection of CMA’s intellectual property and its commercial secrets. It was to be read in conjunction with the AWA.
82 In Russell Rothman J held that both terms should be implied in contracts of employment. In that case they did not avail the employee because, although they had been breached, the plaintiff had suffered no damage by reason of the breaches. On appeal, the New South Wales Court of Appeal went no further than holding that such terms may be implied in contracts of employment. Basten JA was (at (2008) 176 IR 82 [32]) inclined to treat the two implied terms as a single obligation. He considered (at [33]) that there was uncertainty as to the “scope and extent of the implied duties.” Campbell JA was prepared to assume, without deciding, that an employer owed implied contractual obligations of the kind relied on by Mr Van Efferen. Giles JA (at [1]) was also prepared to assume rather than determine that such implied terms were incorporated in contracts of employment.
83 In this Court single judges have adopted a more guarded approach. In McDonald (at 398-400) Buchanan J reviewed the authorities relating to the mutual trust and confidence term. He expressed disquiet about the notion that such a term could have escaped judicial notice for so long. More significantly he queried whether such a term could be implied consistently with the principles expounded by the High Court in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283. I respectfully share his Honour’s reservations.
84 In Walker v Citigroup Global Markets Pty Ltd (2005) 226 ALR 114 at 156-157 Kenny J held that, in Australia, a term of good faith “does not apply to employment contracts.” On appeal the Full Court did not need to express a view on her Honour’s finding: see Walker v Citigroup Global Markets Australia Pty Ltd (2006) 233 ALR 687 at 708 [86].
85 As a single judge I would follow the decisions of other single judges unless I considered them to be clearly wrong: see Bank of Western Australia Ltd v Commissioner of Taxation (1994) 55 FCR 233 at 255. Although Buchanan J’s observations in McDonald were obiter I nonetheless consider them to be correct. Kenny J’s ruling in Walker forms part of the ratio of her decision in that case. I do not consider either decision to be clearly wrong. Had it been necessary I would have followed them.
86 In any event, in the circumstances in the present case, it is, at best for Mr Van Efferen, doubtful that the two implied terms add anything to CMA’s contractual obligations having regard to the protective procedures incorporated expressly in clause 2.10 of the AWA. CMA was obliged to act in good faith in applying clause 2.10: cf Tasmania Development and Resources v Martin (2000) 97 IR 66 at 72. Had it done so no breach would have occurred.
CONCLUSION
87 Judgment will be entered for Mr Van Efferen.
88 No detailed submissions were advanced relating to the precise terms of the orders which should be made were Mr Van Efferen to be successful. In particular no attention was directed as to the taxation implications of any order which the Court might be minded to make in Mr Van Efferen’s favour: see Martin v Tasmania Development and Resources (1999) 89 IR 98 at 121-122. It is also necessary to consider whether any specific provision should be made in the court’s order to deal with Mr Van Efferen’s entitlement to interest. I will, therefore, direct that the parties file and serve minutes of orders which will give effect to these reasons.
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I certify that the preceding eighty-eight (88) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice TRACEY. |
Associate:
Dated: 4 June 2009
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Counsel for the Applicant: |
Mr J L Bourke and Mr M Felman |
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Solicitor for the Applicant: |
Petersens Lawyers |
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Counsel for the Respondent: |
Mr T Saunders |
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Solicitor for the Respondent: |
Sparke Helmore Lawyers |
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Date of Hearing: |
16, 17 and 18 December 2008 |
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Date of Judgment: |
4 June 2009 |
