FEDERAL COURT OF AUSTRALIA

Heldberg v Rand Transport (1986) Pty Ltd [2018] FCA 1141

ORDERS

THE COURT ORDERS THAT:

1.    The matter is adjourned to a date to be fixed for the entry of judgment and for submissions with respect to costs and interest.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

WHITE J:

1    Between 13 August 2002 and 14 March 2017, the Applicant was employed by the Respondent (Rand). Rand is a refrigerated transportation, cold storage and distribution company operating nationally. It is a subsidiary of Automotive Holdings Group Ltd (AHG). Harris Refrigerated Logistics and Scott’s Refrigerated Freightways are also subsidiaries of AHG.

2    On 14 March 2017, the Applicant’s employment was terminated on the ground of redundancy. In addition to his accrued annual leave and long service leave entitlements, the Applicant was paid five weeks’ pay in lieu of notice and a severance payment of 12 weeks’.

3    In these proceedings, the Applicant claims damages for breach of his employment contract, as follows:

(a)    $102,000, being the aggregate of unpaid monthly bonuses of $3,400 for the period between May 2014 and November 2016;

(b)    $94,615.38 as an additional severance payment (the Applicant says that he was entitled to the equivalent of 42.75 weeks rather than the 12 weeks which he was paid); and

(c)    $176,430.77 by way of damages on account of Rand’s failure to provide him with 12 months’ notice of termination, which the Applicant contends was the required period of reasonable notice in his case. In his opening submissions, the Applicant modified this claim by acknowledging that his claim could be for an additional 11 weeks only, given that he had obtained alternative employment with a generally comparable remuneration package commencing on 3 July 2017.

4    The Applicant claims in addition that he accepted employment in the position from which he was retrenched in reliance on a representation concerning the payment of bonuses. He alleges that the representation was misleading or deceptive, in contravention of s 18 of the Australian Consumer Law (ACL), or liable to mislead, in contravention of s 31 of the ACL. The Applicant alleges that, had the representation not been made, he would not have accepted the position. He claims damages under s 236 of the ACL of $69,810.18 in respect of the loss he claims to have suffered by having done so.

5    For the reasons which follow I consider that the Applicant succeeds in establishing an entitlement to the monthly bonuses for 10 months. All his other claims fail.

Factual setting

6    Many of the circumstances giving rise to the Applicant’s claim were not in issue. I make the following findings concerning those circumstances.

7    The Applicant is now 48 years old. On 13 August 2002, when he was 32 years old, he accepted an offer of employment with Rand in Perth in the position of Night Shift Storeperson. This was a wage position and, it seems, governed by an enterprise agreement. The offer of employment was made in a letter from Rand dated 12 August 2002 which the Applicant signed (the First Contract). In relation to the termination of service, the First Contract stated:

Termination of Service (Refer Policy & Procedure Manual – 9 Termination or Resignation)

Rand Transport’s Termination Policy aims to provide a structured separation of exiting employees. Rand Transport Managers and Supervisors must ensure the termination procedure is carried out prior to employee departure.

8    It was an agreed fact that, in relation to redundancy, the Human Resources Policies & Procedure Manual in force at the time, but to which the parties referred to as “the 2003 Manual”, provided:

27.3     Part 3 Dismissal On The Grounds Of Redundancy

…

27.3.4    Severance Pay

The employee(s) will be given three weeks’ pay for each year of service, pro-rated on completed months of service, or the award entitlement, whichever is greater.

Alternatively the employee will be paid severance pay in accordance with the relevant award or enterprise agreement; the contract of employment; or relevant statutory provisions.

The parties referred to this provision as the “Redundancy Term” and I will do likewise.

9    The Redundancy Term provided the basis for the Applicant’s claim to an additional severance payment as he claims that the entitlement to severance pay of at least three weeks for each year of service contained in that Policy remained a term of his contract throughout the remainder of his employment with Rand, even after his promotion to more senior positions.

10    In late 2002, the Applicant’s position changed to that of Night Shift Manager and he continued in that position until 13 August 2006.

11    On 14 August 2006, the Applicant commenced in the position of Primary Freight Team Leader in Perth. This was a salaried position and the Applicant’s employment ceased to be governed by an enterprise agreement. Rand set out the terms of the Applicant’s employment in a letter dated 11 August 2006, which the Applicant countersigned (the Second Contract). The provision for termination of employment in the Second Contract was identical to that contained in the First Contract. However, the 2003 Manual had been completely revised in the intervening period. With effect from 8 November 2004, the Human Resources Policies and Procedures Manual (the 2004 Manual) no longer contained the entitlement to severance pay of three weeks for each year of service.

12    The Applicant continued as Primary Freight Team Leader until 1 February 2014, although his position title changed to National Primary Freight Manager. By early 2014, the Applicant was receiving a salary of $100,000 plus superannuation.

13    In or about January 2014, Mr Shaun Coniglio, Rand’s National Operations Manager, and the Applicant had discussions about the Applicant taking up the position of State Manager for Rand in South Australia. This would involve the Applicant relocating from Perth to Adelaide. Mr Coniglio provided the Applicant with details of the proposed contract of employment in an email on 29 January 2014 bearing the subject line “Broad brush of offer – State Manager Adelaide”. The substance of the email was as follows:

Tony,

Basis of the offer

$160 k per annum

$40 k in bonuses based around achieving budget to be determined)

Company Car, phone and laptop

LAHA $500 per week for first year

4 flights per year for [your wife] for 2 years (yours will be business trips to match and suit)

Rand to pay reasonable expenses for removal of household furniture (must stay in SA for min 2 years or else you will need to reimburse for the expense)

This will be a permanent move

Discuss with [your wife] and we will write it up.

It is not clear whether the closing bracket in the fourth line is an artefact, or whether the opening bracket (most probably after the word “budget”) was omitted.

14    The fourth line in this email (namely “$40 k in bonuses based around achieving budget to be determined”) constituted the conduct of Rand which the Applicant alleges was misleading or deceptive or liable to mislead.

15    The Applicant accepted the offer and commenced in the position of SA State Manager on 1 February 2014. As SA State Manager, the Applicant was responsible for the management of Rand’s principal depot in South Australia, which was at Direk, and a smaller depot at Renmark. His duties included overseeing, considering and executing of all commercial, operational and human resources related issues relating to the running of the depot. At the time the Applicant commenced, he was responsible for approximately 150 employees.

16    Ms King, Rand’s National HR Manager, prepared a letter dated 3 March 2014 setting out the terms and conditions of the Applicant’s employment. Although the Applicant did not countersign this letter, it was common ground that it contained the terms of his contract of employment (the Third Contract). It provided (relevantly):

Dear Tony,

We have pleasure in confirming our offer to you as SA State Manager for [Rand], located in Adelaide. We are very pleased to make this offer and believe that you will make a significant contribution to our organization. Outlined below are the benefits, terms and conditions of your employment for the two year fixed term contract period.

Commencement Date        February 1, 2014.

    Your original start date of 13th August 2002 will continue to be recognized for employment tenure and entitlements.

Remuneration & Benefits    Base Salary:

The base salary will be $137,900 per annum. Your salary will be paid monthly, (approximately two weeks in arrears and two weeks in advance) into your nominated bank account on the 15th day of each month.

Company Car:

…

Living Away From Home Allowance:

A Living Away from Home Allowance of $48,100 allowance will be payable for the first 12 months.

Should you remain in the role beyond 12 months, the Living Away From Home allowance will cease and your base salary will be adjusted to $160,000pa.

Accommodation:

You are responsible for the costs associated with your residential accommodation in Adelaide.

Return Air Travel from Adelaide to Perth.

The company will provide your spouse 4 return flights per annum between Adelaide and Perth for the first two years of this contract.

Removal Expenses:

The Company will reimburse reasonable costs of removal expenses associated with the relocation to Adelaide. Supporting documentation will be required to be submitted.

Incentive Scheme:

Participation in the company incentive scheme is available based on the following formula.

$3,400 per month bonus (paid two months in arrears) for achieving the SA state budget. The first 3 months incentive will be guaranteed.

…

Confidential Information    …

Termination of Service

Rand Transport’s Termination Policy aims to provide a structured separation of exiting employees. Rand Transport Managers and Supervisors must ensure the termination procedure is carried out prior to employee departure.

Company Policy    It is a requirement of your employment that you abide by all company policies and procedures as varied from time to time and [as] detailed in the Human Resource Policies & Procedures Manual which is available on the Everyone Drive.

...

(Emphasis added)

17    In accordance with the term concerning the living away from home allowance, on or around 1 February 2015, the Applicant’s base salary was increased to $160,000 per annum and he then ceased receiving that allowance.

18    Although Rand’s letter of 3 March 2014 referred to the Applicant’s employment being for a “2 year fixed term contract period”, the Applicant’s employment continued after 1 February 2016 without the parties entering into any further contract. This gave rise to an issue to which it will be necessary to return. On 10 November 2016, the Applicant signed a document entitled “Amendment to Employment Contract”. The document commenced:

This is an Amendment to the previous Employment Contract dated March 3 2014 under the Heading “Remuneration & Benefits” sub-heading Company Car.

19    The amendment indicated that the previous clause concerning the provision of a company car no longer applied and was replaced with a new clause headed “Car Allowance”, as follows:

Car Allowance:

Effective 1st December 2016 you will receive a Car Allowance of $20,000 per annum.

You will be responsible for all costs associated with the running and maintenance of the vehicle you operate including insurance and registration.

The Applicant then signed the following acknowledgement:

I, Anthony Heldberg, acknowledge that I have read, understood and agreed to comply with the terms and conditions outlined in this Amended Employment Contract.

In effect, the amendment involved the Applicant “cashing out” his entitlement to be provided with a “company car”.

20    The Applicant’s employment then continued until his retrenchment on 14 March 2017.

21    I mentioned the complete revision of the 2003 Manual in November 2004. It was located on the “Everyone Drive” in Rand’s computer network. This network drive was accessible to all of Rand’s employees, including the Applicant. The 2004 Manual continued in force until 16 January 2008 when it was updated. Ms King referred to the updated manual as the “2008 Manual”. In mid-2013, Ms King withdrew the 2008 Manual from the Everyone Drive. She did so in consultation with Mr Cole, Rand’s General Manager, because she recognised that some of its contents were not compliant with current legislative requirements. Ms King placed a document on the Everyone Drive in substitution for the 2008 Manual which said “This manual has been removed from access”. The 2008 Manual had not been reinstated to the Everyone Drive at the time that the Applicant commenced as SA Manager.

22    Ms King said, and I accept, that during 2014, AHG developed business-wide policies. These superseded the 2008 Manual. I am satisfied that the policies relevant to these proceedings were in place, and available to employees, by 31 January 2016.

23    It was an agreed fact that, following the termination of his employment, the Applicant commenced with PFD Food Services Pty Ltd on 3 July 2017 as its State Operations Manager. It was also common ground that the Applicant’s remuneration package in that employment is, and has been, the equivalent to that which he had in his position as State Manger with Rand.

24    The Applicant gave evidence himself, but did not lead evidence from any other witnesses. Rand led evidence from Ms King, Mr Baird (a National Human Resources Manager who reports to Ms King) and Mr Ainsworth to whom I will refer later. Few of the issues in the trial turned on issues of credibility and, accordingly, it is not necessary to make detailed findings. In general, all of the witnesses gave their evidence well. As will be seen, there is one issue on which I do not accept the evidence of the Applicant.

Breach of contract – the claim for an additional severance payment

25    The Applicant recognised that he had received a severance payment calculated in accordance with the National Employment Standard contained in s 119 of the Fair Work Act 2009 (Cth) (the FW Act). He also recognised that neither the 2008 Manual nor the manual in force at 14 March 2017 conferred an entitlement to a severance payment based on three weeks’ pay for each year of service.

26    The Applicant submitted that the Redundancy Term had been a term of the First Contract made on 13 August 2002 and that it had remained a term of his contract of employment until his termination on 14 March 2017. The removal of the term from the 2003 Manual on 8 November 2004 had been of no effect, he submitted, because it had not been open to Rand unilaterally to alter the terms of his contract of employment by the removal of the Redundancy Term from the 2003 Manual. That removal could have constituted a variation only if he had, expressly or by his conduct, accepted the variation. The Applicant submitted that there had been no such acceptance because, amongst other things, he had been unaware of the removal of the Redundancy Term from the 2003 Manual.

27    This contention has, as its premise, (a) the proposition that the Applicant’s employment with Rand from 13 August 2002 until termination had been subject to a single contract of employment, albeit with terms varied from time to time; or (b) the proposition that the Second and Third Contracts had not wholly discharged the First, at least with respect to the Redundancy Term. The validity of the premise depends on the appropriate characterisation of the Second and Third Contracts and their effect on the Contract which preceded them.

28    Rand accepted that the Redundancy Term had been a term of the Applicant’s contract of employment, at least when he commenced in August 2002. It submitted, however, that the Redundancy Term had ceased to be part of the Applicant’s contract of employment on 8 November 2004 (when the clause was removed from the 2003 Manual) and that it did not, in any event, form part of the Third Contract. The merit of the first of these propositions is doubtful but the second requires more detailed consideration.

The effect of a subsequent contract on an earlier contract – principles

29    The entry by parties to a contract into a later contract governing their relationship can give rise to a number of issues, including issues concerning the status of the first contract. In Commissioner of Taxation of the Commonwealth of Australia v Sara Lee Household & Body Care (Australia) Pty Ltd [2000] HCA 35; (2000) 201 CLR 520, the plurality referred to some of these issues:

[22]    When the parties to an existing contract enter into a further contract by which they vary the original contract, then, by hypothesis, they have made two contracts. For one reason or another, it may be material to determine whether the effect of the second contract is to bring an end to the first contract and replace it with the second, or whether the effect is to leave the first contract standing, subject to the alteration. For example, something may turn upon the place, or the time, or the form, of the contract, and it may therefore be necessary to decide whether the original contract subsists. …

30    The plurality also referred with approval to the following passage in the judgment of Taylor J in Tallerman & Co Pty Ltd v Nathan’s Merchandise (Vic) Pty Ltd (1957) 98 CLR 93 at 144:

It is firmly established by a long line of cases … that the parties to an agreement may vary some of its terms by a subsequent agreement. They may, of course, rescind the earlier agreement altogether, and this may be done either expressly or by implication, but the determining factor must always be the intention of the parties as disclosed by the later agreement.

31    The intention of the parties is to be determined objectively and not by consideration of the parties’ subjective intentions. The objective theory of contract prevails. See Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 in which the High Court said, at [40]:

It is not the subjective beliefs or understandings 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. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean.

32    In Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 176 ALR 693, Gleeson CJ, Gaudron and Gummow JJ stated that the surrounding circumstances, as well as the text of the second agreement, may indicate the parties’ intention.

33    In Balanced Securities Ltd v Dumayne Property Group Pty Ltd [2017] VSCA 61; (2016) 53 VR 14, the Court of Appeal of the Supreme Court of Victoria summarised the principles emerging from these (and other) authorities as follows, at [78]:

(1)    The relevant issue is whether the subsequent agreement amends the earlier agreement or brings it to an end and replaces it.

(2)    The earlier agreement may be brought to an end either expressly or by implication.

(3)    The issue is to be resolved by ascertaining the manifest intention of the parties.

(4)    The manifest intention of the parties is to be ascertained objectively by the construction of the subsequent agreement, having regard to the relevant context of that agreement where it is permissible to do so in accordance with the ordinary principles of contractual construction.

(5)    A potentially critical factor militating in favour of a conclusion that the manifest intention of the parties, objectively ascertained, was to bring the earlier agreement to an end and replace it, is where the terms of the two relevant agreements deal with the same subject matter in different and inconsistent ways.

(Citations omitted)

34    These are the principles to be applied in this case.

Application of the principles to the Applicant’s claim

35    The Applicant emphasised that his employment with Rand had been continuous and referred to the statement in the Third Contract:

Your original start date of 13th August 2002 will continue to be recognized for employment tenure and entitlements.

This was to be construed, he submitted, as an indication that the terms and conditions originally applying to his employment continued. The Applicant also submitted that, despite the “complete revision” of the 2003 Manual on 8 November 2004, it had continued to be available “on the system” within Rand.

36    In my opinion, a number of features indicate, objectively, an intention by the parties that the Third Contract was to be a new contract regulating their employment relationship, and supplanting the previous contracts. First, the Third Contract concerned the senior position of State Manager. It is evident that this was different in both function, seniority and location from the Applicant’s previous positions. It was a very different position from that of Night Shift Storeperson with which the Applicant had commenced with Rand in August 2002. It is not readily to be supposed on an objective consideration that the parties intended that terms and conditions applicable to the Applicant when employed in wage position as a storeperson and subject to an enterprise agreement should continue to apply to his position as State Manager.

37    Secondly, the contract referred to the Applicant’s employment as being for “the two year fixed term contract period”. A fixed term contract was different from the Applicant’s previous employment which had been of indefinite duration. The parties are not to be taken to have been even contemplating termination for redundancy in the context of such a contract.

38    Thirdly, in context, the reference to the Applicant’s original start date is explicable as an assurance to him that 13 August 2002 would be used for the purposes of calculating his service-related entitlements. It cannot reasonably be understood as indicating in addition that the terms and conditions applicable to his employment as Night Shift Storeperson would continue to be applicable to his employment in a very different and more senior position. Had the parties intended that terms and conditions applicable to the Applicant’s employment as at 13 August 2002 should continue to be applicable, it is to be expected that there would have been an express statement to that effect, and such a statement is lacking.

39    Fourthly, the Fourth Contract addresses in a number of respects the same subject matters as did the earlier Contracts. To my mind, that is inconsistent with the parties having, objectively, an intention that the earlier Contracts should continue to apply.

40    Fifthly, there is no objective indication that the terms of the Third Contract were directed towards varying the Applicant’s existing Contract.

41    Finally, the parties made it a term of their agreement that “the only conditions that will apply will have to be agreed in writing” between themselves. This indicates objectively an intention by the parties to identify in contemporaneous documents the terms of their agreement.

42    The Third Contract contained an express reference to the Human Resources Policies & Procedures Manual:

It is a requirement of your employment that you abide by all company policies and procedures as varied from time to time and [as] detailed in the Human Resources Policies & Procedures Manual which is available on the Everyone Drive.

43    In fact, the Manual was not available on the Everyone Drive because, as noted, it had been withdrawn and had not, at 3 March 2014, been reinstated on that drive. Nevertheless, considered objectively, this term in the Third Contract is to be understood as a reference to the Manual as in force as at 3 March 2014, that is, the 2008 Manual. It is not sensibly to be understood as a reference to a manual in force some 10 or 12 years previously.

44    Further, Ms King, Rand’s National Human Resources Manager said, and I accept, that she had become aware of the 2003 Manual only as a result of investigations which she had made in relation to Mr Heldberg’s claim. She confirmed that the 2003 Manual was still in the system but in an archived file. It had not been easy to locate. A reasonable person considering the position in March 2014 would not have understood the Third Contract to be referring to such an outdated and archived manual.

45    To my mind, the fact that the 2003 Manual continued to be available “in the system” is a matter which has been seized upon by the Applicant only for the purposes of his present claim, and is in truth immaterial.

46    As noted, the Applicant denied knowledge of the fact that the Manual had been changed so as to remove the entitlement to severance pay based on three weeks’ pay for each year of service. This was surprising given that the Applicant, as State Manager, had had to participate in the selection of those to be made redundant, including reviewing the costs involved, and to implement the retrenchments of several employees. He must thereby have become aware of the retrenchment entitlements of those employees. I considered the Applicant’s denial to be unconvincing and do not accept that aspect of his evidence.

47    For these reasons, I consider that the Third Contract wholly supplanted the earlier Contracts, and that the Applicant had no continuing entitlement under the First Contract or the 2003 Manual. That conclusion does not depend at all on the revision of the Manual which occurred in November 2004.

Conclusion on the claim to an additional severance payment

48    The 2008 Manual which was in force at 3 March 2014 did not contain any entitlement to severance payments. Nor did the AHG policies in force at 14 March 2017. The relevant clause in the latter was as follows:

7.13    Redundancy Payments

7.13.1    Managers and Supervisors must not intimate, infer or in any other manner create an expectation among employees that if positions within the organization become redundant that redundancy payments will be made.

7.13.2    Relevant federal and state law will be scrutinized to determine whether any redundancy payment should be paid.

7.13.3    Any enterprise agreement will be scrutinized to determine whether any redundancy payment should be paid.

7.13.4    Where there is no obligation on Rand Transport to make redundancy payments any such payment will be at the absolute discretion of the General Manager.

…

49    As can be seen, cl 7.13 does not provide for any entitlement to severance payment. Instead, it creates an expectation to the contrary, and indicates that redundancy payments are at the absolute discretion of the General Manager. The Applicant has received the only amount to which he was entitled, namely, the entitlement for which s 119 of the FW Act provides.

50    Accordingly, his claim for a further severance payment must be dismissed.

Breach of contract – the incentive payments

51    The Applicant’s claim is that Rand breached the Incentive Scheme provision in the Third Contract by failing to pay bonus payments in the period from May 2014 to November 2016. This was said in the Statement of Claim to be a 30 month period – it is in fact 31 months. The Applicant did not make any claim with respect to December 2016 nor with respect to the first three months of 2017.

52    As noted earlier, the Third Contract provided for the Applicant to be paid a bonus of $3,400 per month (paid two months in arrears) “for achieving the SA State budget”. In addition, the Third Contract guaranteed that the Applicant receive the incentive payments for the first three months of his employment.

53    It was common ground that the Applicant did receive incentive payments for the months of February, March and April 2014 and that he had not been paid any incentive payments thereafter.

54    This claim of the Applicant gives rise to two issues: one of construction and one of fact.

The construction issue

55    The parties disagreed as to whether the achievement of the SA State budget to which the Third Contract referred was the annual budget or the monthly budget. The Applicant contended for the former and Rand for the latter. It emphasised that its budgets for South Australia were set annually.

56    Many of the matters to which Rand referred in support of its submission concerning the construction of this part of the contract were inadmissible, for example, its reliance on the Applicant’s evidence that, after February 2016, he had been involved in preparing annual budgets, that he had been periodically updated on the performance of the South Australian Branch by reason of his participation in management meetings, and his evidence concerning the declining financial performance of the South Australian operations.

57    In my opinion, a number of matters support the Applicant’s construction. First, the bonus is expressed as an amount “per month” and not as an annual amount. Secondly, the bonus was to be paid (when the entitlement to it was achieved) two months in arrears. That is much more consistent with the entitlement to the bonus being calculated on a monthly basis. That method of payment does not seem apt had the parties intended that it be performance against annual budget which was to be the criterion for the incentive payments.

58    The circumstance that the first three months of the incentive payments were guaranteed is, objectively considered, inconsistent with an intention that the annual budget be the criterion. There would have been no point to the provision of that guarantee, had it been the parties’ intention that the entitlement to the bonus would only become known after the end of the financial year.

59    I conclude that it was the Applicant’s achievement of the monthly budget which entitled him to the agreed incentive payments.

The factual issue

60    Rand’s budgets for South Australia contained, for each month in each year, forecast losses. This was also the position at the time of formation of the Third Contract. Rand expected losses in the States which were “receiving” States, in the sense that it transported more refrigerated goods into those States than it transported from them. South Australia was one such State. It was common ground, however, that “achieving budget” could be obtained without the South Australian operations achieving a profit. That is to say, South Australia could achieve budget if the loss for the month was less than that contained in its target.

61    Rand adduced evidence from Mr Ainsworth who has been the Chief Financial Officer for AHG since September 2016. Mr Ainsworth said that, in the period between March 2014 and June 2016 (both months inclusive), the South Australian operations had achieved budget (although still making a loss) in only five months. These were December 2014, September 2015, January, May and June 2016. That evidence was not challenged and I accept it. Accordingly, the Applicant is entitled to payment of the monthly incentive of $3,400 in respect of each of those months.

62    The position with respect to the months of July to November 2016 is less clear. Mr Ainsworth said that the system of budgeting within Rand changed after 1 July 2016. Instead of preparing separate State budgets, Rand had moved to national budgets. However, some draft budgets for the South Australian operations had been prepared and these had been used to prepare monthly reports within Rand’s accountancy team.

63    Mr Ainsworth said of these monthly reports:

[36]    Draft budgets were completed and they were used internally by accounting teams to assist with the preparation of monthly corporate accounting. However, they were not intended to measure performance against budget. We stopped running these numbers in November 2016 and from December 2016 the budget column in these documents were not being updated. So, whilst these draft documents exist, they are incomplete and inaccurate.

64    In his oral evidence, Mr Ainsworth said that the budget figures were incomplete because they were not final, by reason of the budget process having never been completed. Nevertheless, Mr Ainsworth confirmed that the monthly reports containing a comparison of the actual performance of the South Australian operations and the budget for the South Australian operations (on a monthly basis) had been prepared by the Rand Business Unit Accounting Team, had been “loaded” into “their budget system”, and had been used to review the performance of the South Australian operations in the months to which they related. He also said that, apart from the fact that the budgets had not received final approval, he had not identified in respect of the months of July through to November any other matter indicating that they were incomplete.

65    In these circumstances, I consider that it should be accepted that the Applicant has established that the monthly reports for July to November 2016 do provide a sufficiently reliable means by which the performance of the South Australian operations against budget can be assessed. That comparison shows that the budget for South Australia was achieved in each of those months.

66    I accept that the information in the monthly reports for the period December 2016 to March 2017 is unreliable. It is not necessary to identify the features which indicate that that is so because the Applicant’s pleaded case confined his claim for the unpaid incentive payments to the period concluding in November 2016.

67    I am satisfied that the Applicant has shown an entitlement to payment of the incentive payment for a total of 10 months. Accordingly, he is entitled to damages of $34,000 in respect of the unpaid incentive payments.

The claim to reasonable notice

68    The Applicant claims that, because his contract of employment after 1 February 2016 did not contain any provision with respect to notice, he was entitled, pursuant to the common law implied term of reasonable notice, to have been given 12 months’ notice of termination. Hence he claimed initially the difference between the five weeks which he was paid and the 52 weeks to which he claims to have been entitled. At trial however, the Applicant acknowledged that this was a claim for an additional 11 weeks only, given that he had mitigated his loss by obtaining the job with PFD Food Services Pty Ltd.

69    Rand disputed that the Applicant had that entitlement. It submitted that, by reason of a term in the Applicant’s contract, he was entitled only to the notice for which the 2014 Manual provided. It had paid the Applicant the equivalent amount in lieu of notice. Further, Rand contended that, even if the Applicant did have the entitlement to reasonable notice which he claimed, a number of other matters precluded the award of damages which he seeks.

Identifying the contract

70    The issue as to whether the Applicant’s contract contained any provision with respect to notice arises from the reference in the first paragraph of the Third Contract to “the two year fixed term contract period”.

71    Prima facie, this suggested that the Applicant was employed as SA Manager for a fixed term of two years. There was no suggestion that the inclusion of this term was a mistake. The Applicant accepted that he had been engaged on a fixed term contract and Ms King, who prepared the Third Contract, said that she had included the reference to the two year term on the instructions of Mr Coniglio. Further, by its filed defence, Rand admitted that it had been a term or condition of the Applicant’s employment that he would be employed for a fixed term of two years.

72    It seems that the expiry of the two year term on 31 January 2016 went unnoticed. After 31 January 2016, the employment relationship continued as it had before.

73    The Applicant contends that in this circumstance a new contract came into existence, by implication, on 1 February 2016. Rand denied that that was so and contended that the Third Contract continued to govern the employment relationship.

74    In his opening submissions, Rand’s counsel sought to depart from the pleaded admission that it was a term of the Third Contract that the Applicant’s employment be for a fixed term of two years. He submitted that this term in the Third Contract was to be understood as a statement of intention, that is, a statement that the terms and conditions in the Third Contract were to apply for a period of two years but not that the contract itself be for such a term. Counsel then submitted that the Third Contract had continued in force after 1 February 2016 with the same terms in every respect which had applied before that date.

75    In the closing submissions, Rand’s counsel made a slightly different submission, namely, that this term in the Third Contract was to be understood as a statement that the terms and conditions in the Third Contract were to apply for a minimum period of two years. Counsel referred in this respect to the provision for return air travel which indicated that the Applicant’s wife would be entitled to a number of return flights to Perth “for the first two years of this contract”. He submitted that this was an express contemplation that the employment may continue beyond the first two years and that it was inconsistent, objectively considered, with a mutual expectation that the employment should come to an end on the expiry of the fixed term.

76    I do not agree that the inconsistency for which Rand contends does exist. The better view is that the term on which Rand relies evidences a recognition by the parties that the Applicant may continue to be employed beyond the initial two year fixed term and that, if that occurred, he would have no continuing entitlement to air fares for his spouse. I note again that Rand admitted by its pleaded defence that it was a term of the Third Contract that the Applicant be employed for that fixed term.

77    It is not uncommon for parties to a contract with a fixed term to continue their relationship after the expiry of that term, without adverting expressly to the terms and conditions which are to apply. The approach of the courts when this occurs is, I think, now settled. It is that the parties may be taken to have entered into a new contract of indefinite duration and terminable on reasonable notice, but whether that is so is not a question of law but a question of fact to be determined by reference to the evidence in each case.

78    In Brambles Ltd v Wail [2002] VSCA 150; (2002) 5 VR 169, the Court of Appeal of the Supreme Court of Victoria referred, at [57], to the following passage in Chitty on Contracts, 28th ed (1999), para 1-034:

There may also be an implied contract where the parties make an express contract to last for a fixed term, and continue to act as though the contract still bound them after the term has expired. In such a case the court may infer that the parties have agreed to a newly expressed contract for another term.

(Emphasis added)

79    In the circumstance of that case, the Court of Appeal found, at [61], that the contract in question had not continued “for another term”, but was one which was terminable on reasonable notice:

… The question whether an implied or tacit agreement to continue dealing on the same terms save that the agreement should be terminable on reasonable notice is to be inferred is … an evidentiary or factual question. … The evidence … warrants the finding that after 3 April 1993 the parties proceeded as though still governed by the terms of the original agreement (save that, since it had already expired, either could terminate the substitute arrangement on reasonable notice), … Whether the implied or tacit contract made after 3 April 1993, which cannot be an extension, is called a renewal is really a matter of definition. The important point is that it was a new and separate contract.

(Emphasis added)

80    In Abbott v Women’s and Children’s Hospital Inc [2003] SASC 145; (2003) 86 SASR 1, Besanko J said, at [35]:

[T]he duration of a contract may be for a fixed period, but on the expiry thereof, the relationship of employment may continue. If that occurs, a Court is likely to infer that the parties have entered into a new contract. …

(Emphasis added)

An appeal from this decision was dismissed (Abbott v Women’s and Children’s Hospital Inc [2004] SASC 67) but the Full Court did not address the question presently under consideration.

81    In this Court, in Energy World Corporation Ltd v Maurice Hayes & Associates Pty Ltd [2007] FCAFC 34; (2007) 239 ALR 457 at [24], the Full Court endorsed the view that the question of whether an implied or tacit agreement comes into existence on the same terms as the original contract save that it be terminable on reasonable notice is an evidentiary or factual question. See also Viva Olives Pty Ltd v Origin Olives Australasia Pty Ltd [2012] FCA 545 at [12]-[13] and Cohen v iSoft Group Pty Ltd [2012] FCA 1071 at [45]-[46]. The appeal in the latter case succeeded (Cohen v iSoft Group Pty Ltd [2013] FCAFC 49; (2013) 298 ALR 516), but I do not understand the Full Court to have disturbed the underlying statement of principle.

82    In my opinion, the evidence in the present case warrants the conclusion that a new contract arose by implication from the parties’ conduct after 31 January 2016 when the two year fixed term in the Third Contract expired. At the least, the parties are to be taken to have agreed on a new contract. The terms of that contract were in substance the terms of the Third Contract, save only that it did not include the fixed two year term. Instead, the Applicant’s employment became employment of indefinite duration. The parties recognised that the Applicant’s employment continued on the terms of the Third Contract when they agreed on the Amendment to the Employment Contract which the Applicant executed on 10 November 2016.

Did the common law term of reasonable notice apply?

83    The Applicant submitted that after 1 February 2016, his employment was terminable on reasonable notice. This was because the new contract contained no provision with respect to notice and, accordingly, the common law implied term applied.

84    Rand, on the other hand, submitted that, even if there was a new contract, the period of notice to be given on either side was found in the Manual in force in 2016. Clause 5.2 of the Manual provided:

The following table of notice periods will apply unless otherwise stated in the individual’s employment contract. The actual notice is determined by the period of the employee’s continuous service at the time the notice is given to the employee.

The period is increased by 1 week if the employee is over 45 years old and has completed at least 2 continuous years’ service with AHG at the end of the day the notice is given. …

85    Rand contended that this provision bound the parties by reason of the implied adoption of the term in the Third Contract concerning “Company Policy”. As noted earlier, this required the Applicant to “abide by all company policies and procedures as varied from time to time and [as] detailed in the [Manual]”.

86    In Riverwood International Australia Pty Ltd v McCormick [2000] FCA 889; (2000) 177 ALR 193, the Full Court considered the effect of a term in a letter of appointment expressed as follows:

Company Policies and Practices

You agree to abide by all Company Policies and Practices currently in place, any alterations made to them, and any new ones introduced.

87    In respect of this clause, North J said:

[106]    However, the use of the expression “abide by” in relation to the Manual is apt to embrace both compliance with the obligations imposed by the Manual, and acceptance of the benefits conferred by the Manual. This duality of application follows from the primary meaning of the expression “abide by” given in the Macquarie Dictionary, 3rd Edition, 1997, namely, “to accept and to continue to observe [an agreement]”.

88    Mansfield J considered that the meaning of the term was ambiguous and was to be determined by regard to the circumstance existing when the letter of appointment was signed, insofar as those circumstances were known to both parties, at [147]. Having reviewed the factual matrix, Mansfield J then concluded, at [150]:

… The agreement “to abide by” those policies, in the circumstances, means that the respondent would receive or enjoy the benefits provided for by those policies but only according to their terms, and would himself comply with the terms of those policies as they applied to him.

89    Many of the circumstances of the factual matrix to which Mansfield J referred in Riverwood v McCormick also exist in the present case. Prima facie therefore, the reasoning in Riverwood v McCormick seems applicable in this case. It would also be a surprising result if the Applicant was required to abide by the policies in the Human Resources Policies & Procedures Manual applicable to his circumstances before 31 January 2016 but was not so required by the tacit or implied contract which came into existence after that date.

90    Counsel for the Applicant did not accept that the policies and procedures in the 2016 Manual became part of the Applicant’s assumed contract of employment. The principal matter on which he relied was the stipulation in the Third Contract that the Applicant’s original start date of 13 August 2002 would continue to be recognised for employment tenure and entitlements. This meant, he submitted, that the policies referred to were those in force as at 13 August 2002. For the reasons given earlier, I do not accept that submission. Instead, the Applicant is to be taken to have agreed to abide by Rand’s current policies.

91    Of course, the provision in the Manual in force at 3 March 2014 concerning termination by notice could not have had any application to the Applicant given his employment for a fixed term. However, the term in the Third Contract is to be understood in the way indicated by Mansfield J in Riverwood v McCormick, namely, that the Applicant had agreed to abide by the terms of the policies to the extent that they were applicable to him. When the term is understood in that way, the tacit or implied contract had the effect of requiring the Applicant to abide by the terms of the 2016 Manual with respect to the provision of the notice.

92    The Applicant received payment in lieu for the period of notice specified in the 2016 Manual. Accordingly, he has been paid his entitlements. This part of his claim must fail.

93    This conclusion makes it unnecessary, strictly speaking, to address all the remaining issues raised by the parties concerning the Applicant’s claim for reasonable notice. However, in case this matter goes further, I will refer to some of these issues.

The period of reasonable notice

94    The assessment of the notice which would (absent the parties’ agreement to the contrary) be reasonable in the Applicant’s case is to be determined having regard to all the material circumstances existing as at 14 March 2017. The matters to which courts have regard when determining what is reasonable are well known and include the nature of the employment and the seniority and importance of the position; the employee’s age, qualifications and experience; the length of service; the length of time it is likely to take the employee to obtain alternative employment of a comparable kind; and what the employee gave up to commence the employment from which he or she has been dismissed. Given my conclusion that the Applicant was not entitled to reasonable notice, it is not necessary to discuss these factors in detail. I indicate that, had it been necessary to do so, I would have concluded that six months’ notice was appropriate in the Applicant’s case.

The effect of s 117 of the FW Act

95    Rand submitted that s 117 of the FW Act had the effect of precluding the implication of a term requiring reasonable notice of termination into the Applicant’s employment contract. That was because its operation makes the implication of such a term unnecessary.

96    Section 117 of the FW Act provides:

117 Requirement for notice of termination or payment in lieu

Notice specifying day of termination

(1)    An employer must not terminate an employee’s employment unless the employer has given the employee written notice of the day of the termination (which cannot be before the day the notice is given).

Amount of notice or payment in lieu of notice

(2)    The employer must not terminate the employee’s employment unless:

(a)    the time between giving the notice and the day of the termination is at least the period (the minimum period of notice) worked out under subsection (3); or

(b)    the employer has paid to the employee (or to another person on the employee’s behalf) payment in lieu of notice of at least the amount the employer would have been liable to pay to the employee (or to another person on the employee’s behalf) at the full rate of pay for the hours the employee would have worked had the employment continued until the end of the minimum period of notice.

(3)    Work out the minimum period of notice as follows:

(a)    first, work out the period using the following table:

(b)    then increase the period by 1 week if the employee is over 45 years old and has completed at least 2 years of continuous service with the employer at the end of the day the notice is given.

97    Counsel for Rand referred to a number of authorities in support of his submission that the implication of the term for reasonable notice was unnecessary. The first was Westpac Banking Corporation v Wittenberg [2016] FCAFC 33; (2016) 242 FCR 505. One of the issues in that case concerned the question of whether a term of reasonable notice could be implied into a contract and co-exist with a provision giving rights of termination on specified periods of notice. The Court held that it could not. Buchanan J (with whom McKerracher J and I agreed on this issue) said:

[216]    The implication of terms into particular classes of contract as a matter of law, rather than as an implication from the surrounding facts in a particular case, is grounded in the notion of necessity (Barker). In that respect, as has been from time to time observed, it is not always easy to see how the two classes of implication can be readily distinguished.

[217]    Thus, even in the case of an implication by law into a class of contracts it remains essential, in my respectful view, to bear in mind the “necessity” which compels the implication. And, in both cases, it is accepted that no implication may be made which contradicts the express terms of the particular contract.

[218]    It is generally accepted that the common law will imply a term that a contract of employment may be terminated on reasonable notice into such a contract which makes no provision for termination. In the present appeals it was argued that such a term is implied into every contract of employment unless excluded. The two propositions are different. The first is concerned with filling a gap; the second with establishing a position of primary operation.

98    Later, at [235]-[236], Buchanan J referred to the statements of principle in the majority and minority judgments in Byrne v Australian Airlines Ltd (1995) 185 CLR 410. The majority said at 422-3:

… In the absence of any provision in the award and of any express provision in the contract of employment the law would regard it as a legal incident of the contract that it should be terminable upon reasonable notice or summarily for serious breach.

(Emphasis added)

The minority at 449-50 said:

[T]erms of this kind, although treated as implied by law, may be excluded by express provision made by the parties and also as a result of inconsistency with terms of the contract. The result is that, even if treated as rules of law, they only apply in the absence of an expression of contrary intent.

Buchanan J then continued:

[237]    In most cases there will be no practical difference arising from the two formulations as to their particular effect concerning contracts of employment. In each case the possible implication is, in my respectful view, secondary, subordinate and tied to questions of necessity in order to make the contract effectively operative. The implied term of reasonable notice does not represent the imposition of a judicial rule or standard. The courts have not set out to rewrite individual contracts of employment.

[238]    In the present appeals, the question is whether (as the employees submit) a term requiring reasonable notice may be implied into a contract and co-exist with a provision giving rights of termination on specified periods of notice. In my view, such a term of reasonable notice cannot be implied in such a circumstance. It would derogate from existing contractual rights. It would be inconsistent with express terms of the contract. It must be regarded as excluded.

99    It is to be observed, however, that in Westpac v Wittenberg, Buchanan J was speaking to a circumstance in which it had been accepted by the parties that the provisions in the employer’s redundancy policy containing the periods of notice to be given on termination had been incorporated into the relevant employees’ contracts of employment. It is also to be observed that, although the FW Act, including s 117, had come into operation before the terminations of the employment considered in Wittenberg, there was no suggestion that it operated independently of the matters identified by Buchanan J to preclude the implication of the term.

100    Next, Rand referred to the decision of the Full Court of the Supreme Court of South Australia in Brennan v Kangaroo Island Council [2013] SASCFC 151; (2013) 120 SASR 11. In that case, the Full Court held that an implied term for reasonable notice was not necessary because the industrial award which governed the plaintiff’s employment specified the periods of notice which the employer “must give” in order to terminate the employment of employees. It is apparent that the Full Court’s consideration was based on an understanding that the implied term as to reasonable notice was one of fact, and not of law, at [28], [34]. Nevertheless, its decision is consistent with earlier decisions concerning the effect of award provisions concerning notice, namely, Brackenridge v Toyota Motor Corporation Australia Ltd (1996) 67 IR 162 at 188-9; Elliott v Kodak Australasia Pty Ltd [2001] FCA 807, (2001) 108 IR 23 at 38.

101    Next, counsel referred to two decisions of the District Court of South Australia which are more directly on point. In Kuczmarski v Ascot Administration Pty Ltd [2016] SADC 65; (2016) 259 IR 233, Auxiliary Judge Clayton upheld a submission that it was unnecessary to imply a term for termination on reasonable notice into the contract of employment of an award-free employee given the existence and operation of s 117. His Honour’s reasons appear in the following passages:

[53]    Mr Whitington submitted that a term that a contract of employment may be terminated upon reasonable notice will only be implied by law where it is ‘necessary’ to do so in the sense that it is necessary (not just reasonable) to imply the term in order to prevent the enjoyment of the rights conferred by the contract of employment being rendered nugatory or worthless or seriously undermined, or the contract being ‘deprived of its substance, seriously undermined or drastically revalued’.

[54]    He submitted that where termination on notice is dealt with in a contract, award or act it is not ‘necessary’ to imply the term because the topic has been addressed.

[55]    He submitted that it is not ‘necessary’ to imply by law a term into the contracts between employers and employees which are subject to s 117 of the Fair Work Act because Parliament has provided for a period of notice in s 117.

[56]    He argued that the fact that s 117 only provides for a minimum period of notice is not to the point. Whilst s 117 imposes a minimum obligation it is not ‘necessary’ to imply the term requiring reasonable notice because Parliament has already imposed an obligation on employers to give a period of notice. There was no relevant ‘gap to fill’ in light of the operation of s 117 of the Fair Work Act.

[57]    I accept those submissions.

(Footnotes omitted)

102    Auxiliary Judge Clayton also held that, if the common law did imply a term requiring reasonable notice into all contracts of employment unless excluded by express agreement or displaced by an award or statute, s 117 had the effect of displacing or excluding that term, at [58].

103    Her Honour Judge McIntyre held in Pappas v P&R Electrical Pty Ltd [2016] SADC 132 at [105] that a term as to reasonable notice was not required to give business efficacy to the plaintiff’s contract of employment in that case because s 117 established his entitlement to notice.

104    As counsel for the Applicant pointed out, the approach adopted in Kuczmarski and Pappas, if correct, would mean that s 117 of the FW Act has had the effect of precluding the implication of the common law term for reasonable notice in all cases to which the FW Act applies. Given the decision in the Work Choices Case [2006] HCA 52; (2006) 229 CLR 1, this will mean that the common law term is excluded in the great majority of employment contracts in Australia in which there is no provision for notice and for which an award or enterprise agreement does not specify such a period. If that be so, it may be an unforeseen consequence of the enactment of s 117.

105    It is at least arguable that the decisions in Kuczmarski and Pappas have not had regard at all, or at least have not attached sufficient significance, to:

    consideration of the effect of s 117 having regard to the manner of its expression and its role in stating a National Employment Standard. In this respect, the views expressed by Judge McNab in McGowan v Direct Mail and Marketing Pty Ltd [2016] FCCA 2227; (2016) 313 FLR 370 at [85] may be pertinent:

[85]    I think the better view [than that expressed in Kuczmarski] is that s.117 is in that part of the Act dealing with National Employment Standards and is intended to provide a minimum period only. It does not displace a right to reasonable notice when the contract of employment is silent on the question of notice. By paying or giving the minimum period of notice under s.117(2), the employer will have satisfied the National Employment Standard and not be liable for a claim of breach of those standards. However, it is strongly arguable that payment or provision of that notice will not necessarily satisfy a claim for reasonable notice. The proposition may be tested where the employment of two employees is terminated. Both are over 45 years of age. One has worked for 5 years in a mid-range role, the other has worked for 25 years and worked her or his way up on a high level role. Both are employed under contracts that make no provision for notice of termination. I doubt that parliament intended that both would receive the same period of notice of termination by the enactment of s.117(2) of the Act.

    related to this is that the implied term has a dual aspect: conferring the right to terminate the employment contract but making it subject to the provision of notice. In contrast, s 117 does not in terms grant a right, but prohibits the exercise of an express or implicit right found elsewhere unless the minimum stipulated notice is given: Macken’s Law of Employment (8th ed, Lawbook, 2016), at 371; Gabrielle Golding, Terms Implied by Law into Employment Contracts: Rethinking their Rationale, (PhD Thesis, University of Adelaide, 2017), at 95-6;

    the reference by French CJ, Bell and Keane JJ in Commonwealth Bank of Australia v Barker [2014] HCA 32; (2014) 253 CLR 169 at [30] to the implied term for reasonable notice, without any suggestion that it had been effectively supplanted by s 117: see Golding (2017), at 85;

    the presumption against regarding a statute as modifying or abolishing common law rights unless that is clearly intended: Bropho v State of Western Australia (1990) 171 CLR 1 at 18;

    the circumstance that the prohibition imposed by s 117 is unilateral, whereas the common law implied term usually involves reciprocal rights and obligations (cf Macauslane v Fisher & Paykel Finance Pty Ltd [2002] QCA 282; (2002) 1 Qd R 503 at [16]-[21]) even though the period of notice which is reasonable in order to exercise the right of termination it grants may vary according to whether it is the employer or employee who is to give the notice;

    by imposing only a minimum obligation, s 117 does not on its face preclude a term requiring greater notice: Kilminster v Sun Newspapers Ltd (1931) 46 CLR 284, at 289; and

    the circumstance that s 117 is of general application, applying to employments of very different kinds and in diverse circumstances (see Guthrie v News Ltd [2010] VSC 196; (2010) 27 VR 196, at [197] (Kaye J)). In that respect it differs from most awards and enterprise agreements which are drafted with circumstances of particular industries and employments in mind. That is to say, awards and enterprise agreements are, to an extent, tailor made for the industries to which they apply. Section 117, being of general application, is not of that character. Account may have to be taken of this because notions of necessity usually involve, or at the least are underpinned by, factual considerations. This may make it inappropriate to reason in an a priori way that the fact that s 117 contains provisions concerning notice is sufficient, by itself, to indicate that there is no basis for the implication of the common law term. There may be cases in which it will be apparent that the rights of the parties under the contract of employment will, despite the effect of s 117, be rendered nugatory or seriously undermined without the implication of a term requiring reasonable notice for a termination.

106    Despite the potential importance of the issue, I consider it undesirable for the Court presently to express any concluded view. That should be deferred until it is necessary for the issue to be determined.

Should the severance payment be brought into account?

107    Rand submitted that it was entitled to offset against any liability for further notice the amount of the severance payment which it had paid (equivalent to salary for 12 weeks).

108    Counsel for Rand relied on the decision in Black v Brimbank City Council (1998) 77 IR 405 in which Moore J held that account should be taken of the severance payment made to Mr Black in the assessment of the damages for breach of his employment contract. Moore J said:

Brimbank’s liability for damages arises because, it is to be assumed for present purposes, it breached the contract of employment by terminating it other than in the manner contemplated by the contract itself. This act would expose it to damages which, prima facie, are the benefits Mr Black would have derived while employed for the residue of the contractual term. However, the act which constituted the breach was also the act that founded the entitlement of Mr Black to the payment of severance entitlements under the agreement. Had the contract not been breached by its premature termination and it had run its course and the employment terminated by the effluxion of time, there would have been no payment under the agreement.

The purpose of compensatory damages, whether in actions in tort or contract, is to place the injured party in the same position he or she would have been in had the contract been performed or the tort not committed … The payment of severance entitlements arose directly from the act which constituted the breach for which compensatory damages are now sought. It would, in my opinion, be inconsistent with the purpose for which compensatory damages are awarded to ignore the payment of severance entitlements directly arising from the act which constituted the breach when assessing damages flowing from it.

109    Black v Brimbank City Council had two distinctive features to which Moore J alluded in the passages just quoted. First, Mr Black was retrenched during the currency of his employment for a fixed term of five years (albeit with the possibility for that term to be extended). The second was that Mr Black’s retrenchment occurred during a period in which his employer was precluded, by a term of an industrial agreement certified by the Australian Industrial Relations Commission, from retrenching any employee. It was the Council’s breach of that provision which gave rise to the claim for damages. The first of these circumstances meant that prima facie the measure of Mr Black’s damages was the wages forgone for the balance of the fixed term. It also meant that Mr Black would not have had any entitlement to severance payment had he served the full term of five years. This being so, the conclusion that Mr Black should bring into account in the assessment of damages the redundancy payment he did receive is unsurprising.

110    Furthermore, these features indicate that Moore J should not be understood as stating a principle of more general application to the effect that account may be taken of a severance payment in any claim for damages for wrongful termination on the basis of the employer’s failure to give proper notice.

111    In Reynolds v Southcorp Wines Pty Ltd [2002] FCA 712; (2002) 122 FCR 301, Hely J followed the decision in Black v Brimbank City Council, at [54]-[55], in concluding that the entitlement to the offset should not turn only on the different purposes for which a payment in lieu of notice and severance payment are intended to serve. However, Hely J concluded that no offset should be made in that case because the employee had a contractual entitlement to a severance payment in addition to his entitlement to notice, at [65]-[69].

112    In the earlier decision of Fryar v System Services Pty Ltd (1996) 137 ALR 321 at [331], von Doussa J noted the distinction between the purpose of a period of notice, on the one hand, and the purpose of a severance payment when an employee is retrenched, on the other. It is not necessary presently to quote the relevant passage. The distinction to which von Doussa J referred remains relevant. It appears to underpin the different provisions concerning notice and redundancy pay in ss 117 and 119 of the FW Act. I note that Hely J in Reynolds had recognised this was so when he said:

[44]    Where a contract of employment is terminable by notice, any requirement to make a severance payment is in addition to the requirement to provide notice of termination – the two are distinct: Fryar v System Services Pty Ltd (1996) 137 ALR 321.

113    In Guthrie v News Ltd, Kaye J said, after referring to the decisions in Reynolds, Fryar v System Services and to the decision of Ashley J in Haley v Public Transport Corporation (1998) 119 IR 242, that the respondent’s concession that the notice payment and the redundancy/severance payment were not to be regarded as the same or as overlapping any respect was correct, at [200]-[204].

114    In those circumstances, had it been necessary to do so, I would not have accepted Rand’s claim that it was entitled to offset the amount of the severance payment against the damages to be paid for failure to provide proper notice of termination.

Deductions from the Applicant’s accumulated annual and long service leave entitlements

115    Rand’s next submission was that the amounts which it had paid the Applicant for his accumulated annual and long service leave entitlements should be offset against any additional obligations it had with respect to the provision of notice. It referred to the principle that, in the assessment of damages for breach of contract, damages should be assessed on the basis that the respondent would have discharged its contractual obligations in the way most beneficial to it: see Mason CJ and Dawson J in Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 92. That principle was applied by Moore J in Black v Brimbank City Council at 421 and in Grout v Gunnedah Shire Council (No 3) (1995) 129 ALR 372; (1995) 59 IR 248 at 250-2.

116    Rand’s submission was that it could have directed the Applicant to commence annual leave on 14 March 2017 and, when he had exhausted his accumulated annual leave entitlements, then directed him to have commenced long service leave. Having done that, it could have given the Applicant notice of termination of his employment to run concurrently with his leave. That being so, the amounts which the Applicant would receive for his accumulated annual and long service leave entitlements should be brought into account in the reduction of the damages which it had to pay by reason of its failure to provide reasonable notice.

117    It is possible for an employer to give notice of termination of employment which runs concurrently with a period during which the employee is on leave: Macauslane v Fisher & Paykel Finance at [31]-[32].

118    However, in a context like the present, account would have to be taken of a number of matters. The first, in relation to annual leave, is s 94(5) of the FW Act. It provides:

Requirements to take paid annual leave

(5)    An employer may require an award/agreement free employee to take a period of paid annual leave, but only if the requirement is reasonable.

Note:    A requirement to take paid annual leave may be reasonable if, for example:

(a)    the employee has accrued an excessive amount of paid annual leave; or

(b)    the employer’s enterprise is being shut down for a period (for example, between Christmas and New Year).

119    Section 94(5) has a counterpart in relation to modern awards and enterprise agreements in s 93(3), which provides:

Terms about requirements to take paid annual leave

(3)    A modern award or enterprise agreement may include terms requiring an employee, or allowing for an employee to be required, to take paid annual leave in particular circumstances, but only if the requirement is reasonable.

120    The effect of s 94(5) in the present case is that any requirement by Rand that the Applicant take annual leave would have to have been reasonable.

121    It is generally accepted that the purpose of annual leave is to provide employees with a period of rest and recreation: Re Four Yearly Review of Modern Awards – Annual Leave [2015] FWCFB 3406; (2015) 250 IR 119 at [117]. It is recognised that the provision of such a period has advantages for both employees and employers. Given the nature and purpose of annual leave, it may be an unusual case in which a peremptory requirement by an employer that an employee commence annual leave forthwith would be regarded as reasonable. Some period of notice will usually be necessary in order that employees can plan for the use of their time, and that of their families, during the period of leave. The examples given in the Note to s 94(3) are not inconsistent with some notice being appropriate.

122    Some indication of the matters which bear upon the reasonableness of a requirement that an employee take annual leave is contained in the Explanatory Memorandum to the Fair Work Bill 2008 (Cth):

[381]    Subclause 93(3) permits terms to be included in an award or agreement that require an employee, or that enable an employer to require or direct an employee, to take paid annual leave in particular circumstances, but only if the requirement is reasonable. This may include the employer requiring an employee to take a period of annual leave to reduce the employee’s excessive level of accrual or if the employer decides to shut down the workplace over the Christmas/New Year period.

[382]    In assessing the reasonableness of a requirement or direction under this subclause it is envisaged that the following are all relevant considerations:

•    the needs of both the employee and the employer’s business;

•    any agreed arrangement with the employee;

•    the custom and practice in the business;

•    the timing of the requirement or direction to take leave; and

•    the reasonableness of the period of notice given to the employee to take leave.

…

[385]    Subclause 94(5) allows an employer to require an award/agreement free employee to take a period of paid annual leave, but only if the requirement is reasonable. The factors for assessing the reasonableness of a requirement identified for subclause 93(3) equally apply here.

123    As was noted by the Full Bench of the Fair Work Commission in Re Four Yearly Review of Modern Awards – Annual Leave [2016] FWCFB 3177; (2016) 257 IR 368 at [105], these matters indicate that the assessment of whether a requirement to take annual is “reasonable” within the meaning of s 93(3) is not to be “viewed solely through the perspective of the employer”.

124    There may also be a question in the present case as to the extent to which it would have been reasonable for Rand, having announced that the Applicant’s position was redundant and that he was to be retrenched, to require him nevertheless to take leave intended for recreational purposes when its only purpose in doing so was to obtain an economic advantage for itself. Rand would of course have been entitled to take account of its own economic interest, but it is doubtful that it could have given effect to that interest to the exclusion of all other considerations when it had determined to retrench the Applicant.

125    The position is similar under the Long Service Leave Act 1987 (SA) as s 7(3) requires that employees be given a minimum of 60 days’ notice of the date on which they are to commence long service leave.

126    Next, account may have to be taken more generally, in the application of the principle to which Rand referred, of the fact that the entitlements to annual leave and long service leave in this case are statutory, and not contractual, entitlements.

127    Finally, account may have to be taken of Rand’s own assessment, evidenced by the decision it did in fact make, that its interests were best served by the Applicant’s employment being terminated with immediate effect, rather than the Applicant being given notice of termination.

128    My earlier finding that the Applicant was entitled only to the notice for which the 2016 Manual provided makes it unnecessary to reach conclusions about these matters.

Other matters

129    Rand raised some other matters by way of defence to the Applicant’s claim for reasonable notice. However, as I consider that the claim fails in any event, it is not necessary to consider these.

The misleading or deceptive conduct claim

130    The Applicant brought claims pursuant to both ss 18 and 31 of the ACL. Normally, with claims of this kind, it is necessary for a court to make detailed findings as to whether the respondent did engage in conduct which was misleading or deceptive, or liable to mislead; whether the applicant relied upon that conduct to his or her detriment and then to consider issues of loss.

131    In the present case, detailed consideration of all of these matters is not necessary. It is plain that the Applicant cannot establish that the pleaded representation has resulted in him suffering loss.

132    As noted, the Applicant pleaded, in effect, a no transaction case. That is, had the representation concerning the bonus not been made in Mr Congilio’s email of 29 January 2014, he would not have accepted the position of State Manager in South Australia. The Applicant asserted that, in that event, over the six year period commencing on 1 February 2014, he would have been some $69,810.18 better off by having remained in the position of National Primary Freight Manager in Perth. However, in making that calculation, the Applicant excluded altogether the earnings he has received in his employment since 3 July 2017 with PFD Food Services Pty Ltd as its State Operations Manager. There is no basis for the exclusion of those earnings. When they are brought into account, it is apparent that the Applicant has earned significantly more than would have been the case had he remained in his position with Rand in Perth.

133    The Applicant’s counsel submitted that there can be no certainty that the Applicant’s employment with PFD Food Services Pty Ltd will continue to the end of the six year term used by the Applicant for the calculation of his loss. However, that is entirely a matter of speculation as the Applicant did not lead any evidence to indicate that his employment with PFD Food Services Pty Ltd is insecure. The balance of the six year period remaining is approximately 18 months. There is no basis upon which the Court can assess the contingency that the Applicant’s may not continue during that period. Further, and in any event, there is no particular significance in the period of six years. It was the Applicant who chose that period for comparison purposes.

134    The Applicant’s counsel also submitted that, had the Applicant remained in the position of National Primary Freight Manager in Perth, he may have received salary increases and may have received other promotions. That being so, it may be the case that the Applicant is “worse off” by having accepted the SA State Manager position.

135    The difficulty with these submissions is that the Applicant led no evidence to support them. It is not even known whether the position of National Primary Freight Manager still exists, let alone the salary being paid to the current occupant if it does. The Court was not provided with any information in which to base an assessment of the increments in the Applicant’s salary or of the promotions which may have been open to him.

136    Accordingly, these submissions cannot be accepted.

137    Given my conclusion that the Applicant cannot establish a loss in any event, and given that the Applicant sought pecuniary relief only, it is not necessary to address the remaining elements of the Applicant’s consumer law claim in more detail. I add, however, that it is doubtful that the Applicant could have established that the representation made in Mr Coniglio’s email was misleading or deceptive.

Conclusion

138    In summary, I reject all of the Applicant’s claims other than his claim for breach of contract with respect to the unpaid monthly bonuses. The Applicant succeeds on that claim with respect to 10 months. There will be judgment for the Applicant in the sum of $34,000. However, before entering judgment, I will hear from the parties with respect to costs and interest.

Associate:

Dated:    2 August 2018