FEDERAL COURT OF AUSTRALIA

Richards v Byrnecut Australia Pty Ltd [2011] FCA 354

THE COURT ORDERS THAT:

1.    The application be dismissed.

2.    The applicant pay the respondent’s costs of the application, including any reserved costs, such costs to be taxed in default of agreement.

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 Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

1    The applicant in these proceedings is Mr Craig Richards (“Richards”), a former employee of the respondent Byrnecut Australia Pty Ltd (“Byrnecut”). Byrnecut is a mining contractor which undertakes production and development mining for a number of different mine operators, and conducts operations throughout Australia and overseas. In essence, Richards claims that his employment contract with Brynecut which was signed on 1 July 2008 and subsequently terminated on 13 October 2008 was, to enure, for a fixed term of two years with the potential for that term to be extended for another year. In Richards’ submission, Brynecut’s premature termination of his employment was a breach of contract that inflicted on Richards the loss of his salary for the remainder of the contract term. He quantifies that loss as being between $210,000 and $220,000. Byrnecut denies that the termination of Richards’ employment was in breach of contract as, in its submission, the evidence does not support a finding that there was any implied or express term of the contract of employment that it was to enure for any fixed period of time.

Background

2    In or around late April or early May 2008, Richards was living in Sarina near MacKay Queensland with his partner and now wife, Kerrie Michelle Richards (“Kerrie”) and her three children. The family had returned to Sarina following some time spent near Ipswich, where Richards and Kerrie had been engaged in training horses. The outbreak of equine influenza in Queensland had caused considerable financial strain on the family resulting in a decision that Richards should return to the workforce in which he hoped to find a position in the mining industry where he had previously worked for around 15 years, including 9 years for Byrnecut from 1991 to 2000 and for a few months in 2006 and 2007. Richards had worked his way up from a trades assistant to jumbo operator, then to shift supervisor and mine foreman.

3    According to Richards and Kerrie, they were attracted by an advertisement in the local newspaper, the “Daily Mercury” seeking a site project manager for a mine in Western Tasmania offering a contract for three years and a salary package of $235,000 per annum. Intending to apply for that position, Richards drew up a résumé outlining his experience in the mining industry and telephoned Mr Ben McInerney (“McInerney”) to ask whether he, Richards, could nominate McInerney as a referee in support of his application for the advertised position.

4    McInerney is currently a mine manager, having worked for Byrnecut from January 2004 until the end of 2009 where he had progressed from mining engineer to project manager and later senior mining engineer. Richards and McInerney had worked together at the Pillara mine in Western Australia for Western Metals, for which both men had worked until it went into administration in October 2003. They then subsequently worked together for Byrnecut at the Mt Gordon copper mine in North Queensland, where McInerney employed Richards as a shift supervisor.

The Lihir Contract

5    In late April or early May 2008, when McInerney received the telephone request from Richards to act as his referee for the job in Western Tasmania, McInerney was a senior mining engineer for Byrnecut and, together with Mark Arthur Roderick (“Roderick”) the Eastern States Operations Manager for Byrnecut and McInerney’s superior, was involved in the tendering on behalf of Byrnecut for a contract at the Lihir Gold mine in Ballarat, Victoria. Lihir Gold’s invitation to tender stipulated that a new contractor would take over from an incumbent contractor and continue development activities at the mine from around June 2008 for a period of two years, with an option to extend for a third. Byrnecut was awarded the contract (“Lihir Contract”) on either 9 or 10 of June 2008. The operations at the Ballarat site commenced on 1 July 2008 and continued until the Lihir Contract was terminated on 13 August 2009 before the expiration of two years in accordance with a term of the Lihir Contract which allowed for its termination in the event that Lihir Gold no longer required certain equipment and manpower provided by Byrnecut.

Richards’ telephone conversation with McInerney

6    When Richards spoke by telephone to McInerney in late April or early May of 2008, McInerney told him of Byrnecut’s tender for the Lihir Contract and the possibility of a position for Richards at the Ballarat mine site if Byrnecut were the successful tenderer. What was said in this telephone conversation is critical to the resolution of the issues in these proceedings. The evidence and my findings in relation to it are canvassed at [23] to [34] of these reasons. To complete an outline of the factual background, the following matters are not in dispute. Richards did not submit an application for the advertised position in Western Tasmania. On 9 June 2008, McInerney telephoned Richards to inform him that Byrnecut’s tender for the Lihir Contract had been successful and requested a résumé which McInerney in turn sent through to Lihir Gold for approval for Richards to work for Byrnecut at the Ballarat site.

7    On 1 July 2008 Richards signed an employment contract with Byrnecut (“Employment Contract”). On 13 October 2008, Richards’ employment was terminated in accordance with the termination clause in the Employment Contract and Richards was paid $9,938.82 in lieu of notice.

Richards’ claim

8    The statement of claim identifies both a claim for breach of contract and a claim that Byrnecut engaged in misleading and deceptive conduct in contravention of either or both ss 52 and 53B of the Trade Practices Act 1974 (Cth) (“Trade Practices Act”).

9    Richards claims that the Employment Contract which he signed on 1 July 2008 does not include the entirety of his agreement with Byrnecut. He asserts that in his telephone conversations with McInerney, the following representations were made and became incorporated as terms of the Employment Contract;

(a)    his salary would be $130,000 per year including an additional $10,000 in relocation expenses; and

(b)    the position was guaranteed for two years with an option of an additional year.

10    It was contended on behalf of Richards that Byrnecut was in breach of the Employment Contract when it purported to terminate it on 13 October 2008. As the Employment Contract provided, according to Richards, for a fixed term of two years with an option for an additional year, the termination of the Employment Contract before the expiration of two years constituted a breach of contract for which Byrnecut is liable in damages represented by the salary which Richards would have received had the Employment Contract continued for what he contended was its stipulated term.

11    It was pleaded further or alternatively in the statement of claim that, in order to induce Richards to enter into the Employment Contract, McInerney, on behalf of Byrnecut, had represented that Richards would be employed for two years with an option for a third year and that Byrnecut would not terminate the Employment Contract without “substantial cause” (“the Representations”). The statement of claim did not ascribe a particular meaning to “substantial cause” and that concept was not developed during the course of the trial.

12    It is alleged that the Representations had been made in trade and commerce and Richards had relied on them in entering the Employment Contract and not pursuing an application for the position in Western Tasmania. Richards claimed that the Representations were misleading and deceptive because his employment with Byrnecut was not guaranteed for two years and Byrnecut had terminated the Employment Contract without “substantial cause”. It follows, so the argument went, that Richards suffered damage as a result of having been induced to enter into Byrnecut’s employ by the latter’s misleading and deceptive conduct in contravention of ss 52 and 53B of the Trade Practices Act.

The employment contract

13    The principle written terms contained in the Employment Contract signed by Richards are as follows. Clause 1.1 stipulated that any previous agreements should be superseded by providing:

This Agreement constitutes the contract of employment between the Parties and supersedes and replaces any Previous Agreements.

“Previous Agreements” is defined in clause 15 as meaning: “any previous agreements or arrangements which, but for the operation of this Agreement, may apply to the Employee’s employment with the Company.”

14    Clause 2 dealt specifically with the period for which Richards was to be employed by Byrnecut:

Subject of sub-clauses 2.1 and 2.2 the terms and conditions of this Agreement shall apply from the Commencement Date to the Termination Date.

Clause 2.1 defined the commencement date to mean “the date the Employee commences employment with the Company.” That date was specified to be 1 July 2008. Clause 2.2 defined “Termination Date” to mean: “the date of termination of employment under clause 8 of this Agreement.” It appears that the reference to Clause 8 was a mistake and should have been to Clause 7 which concerned suspension and termination.

15    Relevantly, Clause 7.2A of the Employment Contract stated that:

The employment may be terminated by either party, giving to the other not less than one (1) calendar month’s notice in writing or by payment or forfeiture in lieu thereof (as the case may be).

Further, Clause 7.2D provided that Byrnecut might, “by notice in writing, summarily terminate the Employment of the Employee without the requirement to give notice, where the Employee has engaged in serious misconduct”. Such conduct was defined to include a number of listed offences, including violence, physical or verbal abuse, threatened violence, physical abuse or verbal abuse and other similar offences.

16    There is nothing in the written terms of the Employment Contract to suggest that the contract was to enure for a fixed term of two years. It expressly stated that the term of the Employment Contract was from the Commencement Date of 1 July 2008 to the Termination Date, which was expressed to be any date following the Commencement Date on which either party should decided to terminate the contract, provided that one month’s notice was given in writing or there was a payment in lieu of notice.

17    If there is insufficient evidence to establish on the balance or probabilities matters from which other terms may be imported by implication into the Employment Contract, then, the Employment Contract was not unlawfully terminated and, accordingly, Richards must fail in his action for breach of contract and contravention of the Trade Practices Act.

The Trade Practices Act

18    Relevantly, ss 52 and 53B of the Trade Practices Act provide;

52    Misleading or deceptive conduct

(1)    A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

…

53B     Misleading conduct in relation to employment

A corporation shall not, in relation to employment that is to be, or may be, offered by the corporation or by another person, engage in conduct that is liable to mislead persons seeking the employment as to the availability, nature, terms or conditions of, or any other matter relating to, the employment.

19    In Walker v Salomon Smith Barney Securities Pty Ltd [2003] FCA 1099; (2003) 140 IR 433 (“Salomon Smith Barney Securities”) Kenny J persuasively analysed both s 52 and s 53B of the Trade Practices Act and, in relation to s 52, said at [175] that;

[i]n order to make out his case under s 52 in respect of each pleaded representation, Mr Walker needed to establish (1) that the representation was made; (2) that, viewed objectively and subject to s 51A (see below), the representation was misleading or deceptive or likely to mislead or deceive; and (3) that he relied on the representation. In order to be compensated for any loss and damage under s 82(1) of the TPA, Mr Walker needed to establish a causal connection between the respondents' conduct and the loss for which he sought compensation: see, e.g., Wardley Australia Ltd v Western Australia (1992) 175 CLR 514 at 525-526 per Mason CJ, Dawson, Gaudron and McHugh JJ.

20    In relation to s 51A, her Honour noted at [178] that;

Where a corporation makes a representation with respect to a future matter without reasonable grounds for making the representation, s 51A deems the representation to be misleading for the purposes of s 52. As Hill J said in Ting v Blanche (1993) 118 ALR 543 at 552 (Ting v Blanche):

What s 51A does, in a practical sense, in cases where it applies, is to cast the burden of proof upon the respondent corporation who has made a representation about a future matter to show that in making that representation it had reasonable grounds for so doing.

21    In relation to s 53B, after setting out the text of the provision, her Honour said;

[186]    … In order to make out his case under s 53B, Mr Walker needed to establish (1) that each representation was made; (2) that, viewed objectively, the representation was liable to mislead him as to the availability, nature, terms or conditions, or another matter relating to the employment proposed by NatWest; and (3) that he relied on the representation. As in connection with s 52 of the TPA, in order to be compensated for any loss and damage under s 82(1) of the TPA, Mr Walker needed to establish a causal connection between the respondents’ conduct and the loss for which he sought compensation.

[187]     Section 53B prohibits a corporation from engaging in misleading and deceptive conduct in relation to an offer of employment before a contract of employment has been entered into. The misrepresentation must induce the applicant to take up employment with the respondent: see Callinan v Gilro-ERG Pty Ltd. The provision is limited to conduct that took place prior to the commencement of the employment: see Wright v TNT Management Australia Pty Ltd (t/a Comet Overnight Transport) (1989) 15 NSWLR 679, at 691–692, per McHugh JA and 696 per Clarke JA; Dawson v Australian Consolidated Reserves Pty Ltd [1983] ATPR 44,441 (40–374) per Toohey J; and Thomas v Star Maid International Pty Ltd [1999] FCA 911 at [16] per Weinberg J [original emphasis].

22    It is appropriate to emphasise that any claim under s 52 or s 53B of the Trade Practices Act must fail if there is insufficient evidence to establish that a pleaded representation was made.

Consideration

23    There appears to have been a number of telephone conversations between Richards and McInerney before the signing by Richards of his Employment Contract. However, for the purposes of the Representations which form the cornerstone of Richards’ claim in these proceedings, the first telephone conversation between him and McInerney is critical as it was in that conversation that the Representations are alleged to have been made on which Richards claims to have relied. It is common ground between the parties, in the light of the evidence of both Richards and McInerney, that during the first conversation McInerney told Richards that the duration of the Lihir Contract, if secured, would be two years with an option for a third year.

24    In Richards’ submission, the fact that McInerney told him the prospective Lihir Contract would be for two years with an option for a third created an expectation that his employment at the Ballarat mine would similarly last for two years with a possible extension to a third year. Mr McDonald who appeared for Richards argued that the other matters which were discussed in the telephone conversation, such as the nature of the work that Richards would be required to undertake and the potential salary range combined, created an expectation that he would have guaranteed employment for two years with an option for a third.

25    Mr McDonald contended that it matters not whether McInerney told Richards that he had a guaranteed contract for two years or whether he told him that the Lihir Contract was for two years as, in his submission, they amounted to the same thing. They created an expectation in Richards’ mind that he would have a guaranteed security of tenure for two years, which was misleading and deceptive, and relied on by Richards to his alleged detriment as he ceased to pursue the alternative prospect of employment in Western Tasmania in order to work for Byrnecut in Ballarat. According to Mr McDonald, there was therefore a manifest contravention of s 53B of the Trade Practices Act because that section “requires only that the corporation engages in conduct that is liable to mislead persons seeking employment as to the availability, nature, terms and conditions of, or any other matter relating to the employment”.

26    It is not entirely clear from Mr McDonald’s submissions what the misleading conduct of Byrnecut was apart from the statements or representations made by McInerney to the effect that the Lihir Contract would be for two years with an option for a third. As I understand Richards’ argument, the statement by McInerney that the Lihir Contract was for two years created an expectation in Richards’ mind that the Employment Contract which he was being offered was also for that length. Thus it was the creation of that expectation which was said to constitute the misleading and deceptive conduct as that expectation was clearly disappointed. Mr McDonald also suggested that if McInerney hade not been misleading Richards, he would have told him in express terms that the Lihir Contract (which Richards knew was yet to be awarded), and thus, impliedly, the Employment Contract, was not a fixed contract but was an agreement which was capable of being terminated on notice before the expiration of two years, as, in the event, it was.

27    As I understand it, Mr McDonald’s argument came down to an assertion that McInerney led Richards to believe that he had a guaranteed contract of employment for two years. In Mr McDonald’s submission, the representation by McInerney that the Lihir Contract was for two years with an option for a third, imported into the Employment Contract an implied term that Richards would be guaranteed employment for two years terminable only for “substantial cause”. This, presumably, would have entitled Richards to payment of his salary for the remainder of the term whether or not he was required to furnish consideration in the form of continued performance of work. Further, it was submitted that the Employment Contract was not for a mutually enforceable fixed term, so, according to Mr McDonald, Richards, for his part, would be able to terminate the contract on a month’s notice.

28    I regard Richards’ argument as misconceived. The evidence reveals that the only representation made by McInerney was that, should Byrnecut’s tender for the Lihir Contract be successful, that contract would be for two years with an option for a third year. There was no evidence of any statement by McInerney which could constitute an express or implied representation as to the duration of the Employment Contract or its conditions on which it would be terminable The evidence was silent as to any customary understanding in the mining industry, or any other industry, to the effect that the terms of a “head contract” like the Lihir Contract governing its duration are somehow to be incorporated by reference into the contracts of employment of those engaged to work on the head contract so as to define their tenure of employment.

29    The fact that Richards, after his conversation with McInerney, was left with the expectation that his Employment Contract was guaranteed for two years does not mean that any express representation had been made to that effect nor that a term to that effect should be imported by implication into the Employment Contract. The evidence is all the other way. There is also no evidence that Byrnecut made any representation to the effect that the Employment Contract would not be terminated upon notice without “substantial cause”, assuming that phrase to refer to significant misconduct by the employee. In my view, the best evidence of the representations relating to termination of the contract and the term of the contract is within the Employment Contract itself, which was read and signed by Richards on 1 July 2008.

30    Although Mr McDonald contended that Richards had interpreted the conversation with McInerney in a particular way, because of other related matters which were discussed in that conversation, such as Richard’s likely salary and job description, the evidence of both McInerney and Richards on what was actually said by McInerney was quite clear. McInerney said that the Lihir Contract would be for two years with a possible extension for a further year. He said nothing about the terms of the Employment Contract. That was most probably because those terms were in a standard form known to both Richards and McInerney and from which the latter was not authorised to negotiate any departure. There is simply no evidence to support a finding that there was any oral agreement effective to vary the Employment Contract by stipulating that it was enure for a guaranteed two years.

31    It has also been suggested that McInerney actively encouraged Richards to forgo the employment opportunity in Western Tasmania and instead work for Byrnecut. That suggestion was denied by McInerney, but, even if he had given such encouragement, there is nothing to suggest that, viewed objectively, it was misleading or deceptive or that McInerney did not believe that employment with Byrnecut would be advantageous to Richards. At the time of the conversation, Richards and McInerney were friends, Richards having telephoned to seek McInerney’s support as a referee. Any opinion ventured by McInerney about whether or not Richards should apply for the Western Tasmanian job or the Ballarat job for Byrnecut can only be viewed as an honest opinion of a friend who, at the time, had no reason to think that the prospective Lihir Contract would be terminated before the expiration of two years or that Richards’ Employment Contract would be terminated prematurely. Richards, in fact, did not apply for the Western Tasmania job and the evidence does not permit a finding that, had he made one, his application would have been successful. In my view, any encouragement from McInerney to apply for the Byrnecut position did not constitute a representation that, viewed objectively, “was liable to mislead him as to the availability, nature, terms or conditions, or another matter relating to the employment”.

32    In any event, I am not persuaded that McInerney sought to induce Richards to take up the Employment Contract knowing that Richards did not understand the nature of the prospective employment being offered. Nor is there any evidence that McInerney made any statement or representation which was misleading or liable to mislead in relation to the duration, availability, nature, terms or conditions, or any other matter which was ultimately stipulated in the Employment Contract.

33    In my view, Richards’ claim does not surmount the first hurdle which I have identified at [19]-[21] of these reasons, relying on what Kenny J said at [175] and [186] of her reasons in Salomon Smith Barney Securities, requiring proof that the Representations were made. Accordingly, both the breach of contract claim and the Trade Practices Act claims against Byrnecut must fail for lack of proof to the appropriate civil standard. Unless there be an additional oral or implied term to the effect pleaded there was no condition of the Employment Contract which Byrnecut can be said to have breached. Moreover, I am not persuaded that any of the statements and representations which were actually made by McInerney to Richards, viewed objectively, was misleading or deceptive or likely to mislead or deceive.

34    I note in passing that Mr Dalton of Counsel for Byrnecut advanced several other compelling reasons why the claim should fail, which included the fact that the implied term which has been pleaded would have contradicted the express terms of the written Employment Contract signed months after the alleged Representations had been made, as well as other arguments that the alleged Representations were not made in trade or commerce. However, as I have found that there is insufficient evidence to establish, on the balance of probabilities, that the Representations were made or that any of the representations which were made were misleading or deceptive or likely to mislead or deceive, it is unnecessary to consider those further.

Conclusion

35    For the reasons which I have endeavoured to explain, Richards has failed to prove to the requisite standard that Byrnecut was in breach the Employment Contract or that the Representations or any other representations were made in contravention of the Trade Practices Act. Accordingly, the application must be dismissed with costs.

Associate:

Dated:    13 April 2011