Ally v Soanar Pty Ltd
[2008] FMCA 682
•29 May 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| ALLY v SOANAR PTY LTD | [2008] FMCA 682 |
| TRADE PRACTICES – Misleading and deceptive conduct – employment contract – existing employee – summary dismissal application. |
| Federal Court of Australia Act 1976, s.31A Federal Magistrates Act 1999, s.17A. Federal Magistrates Court Rules 2001, r.13.10 Trade Practices Act 1974, ss.51A, 52, 53B, 82 |
| Australian and International Pilots Association v Qantas Airways Ltd [2006] FCA 1441 Barto v GPR Management Services Pty Ltd (1991) 33 FCR 389 Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd (2006) 236 ALR 720, (2006) 70 IPR 146 Commonwealth Bank of Australia (ACN 123 123 124) v ACN 000 247 601 Pty Limited (in liq) (Formerly Stanley Thompson Valuers Pty Limited) [2006] FCA 1416 John Antouny v ANZAM (Aust) Pty Ltd [2003] VSCA 145 O’Neill v Medical Benefits Fund of Australia Ltd (2002) 122 FCR 455 Stryke Corporation Pty Ltd v Miskovic [2007] NSWCA 72 Walker v Salomon Smith Barney Securities Pty Ltd [2003] FCA 1099 Vivid Entertainment v Digital Sinema Australia Pty Ltd [2007] FMCA 157, (2007) 209 FLR 212 |
| Applicant: | DAUD ALLY |
| Respondent: | SOANAR PTY LTD |
| File Number: | MLG 992 of 2007 |
| Judgment of: | Riley FM |
| Hearing date: | 8 May 2008 |
| Date of Last Submission: | 13 May 2008 |
| Delivered at: | Melbourne |
| Delivered on: | 29 May 2008 |
REPRESENTATION
| Counsel for the Applicant: | John M. Selimi |
| Solicitors for the Applicant: | Starnet Legal Pty Ltd |
| Counsel for the Respondent: | Mark Rinaldi |
| Solicitors for the Respondent: | Ponte Earle Lawyers |
ORDERS
The applicant have leave to file an amended statement of claim in the form proposed in the exhibit marked DA1 to the affidavit sworn by the applicant on 8 May 2008.
The application filed on 24 April 2008 by the respondent be dismissed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 992 of 2007
| DAUD ALLY |
Applicant
And
| SOANAR PTY LTD |
Respondent
REASONS FOR JUDGMENT
Applications
This is an application by the respondent pursuant to Rule 13.10 of the Federal Magistrates Court Rules 2001 seeking summary dismissal or a permanent stay of the proceedings on the grounds that the proposed statement of claim does not disclose a reasonable cause of action. The original statement of claim was struck out on 12 December 2007. The applicant was given leave to file and serve an amended statement of claim on or before 7 February 2008. He failed to do so. After the respondent filed the present interlocutory application, the applicant filed an application seeking leave to file a proposed amended statement of claim.
Factual background
In or about September 1996, the applicant was employed by Hagemeyer Asia Pacific Electronics Pty Ltd as a field applications engineer. He moved into various management positions within Hagemeyer and in 2004 became a marketing manager.
In April 2005, the respondent bought Hagemeyer’s business. The applicant entered into a new employment contract with the respondent. The contract provided for the applicant to have the position of marketing manager commencing on 1 April 2005. Clause 8.1 of the contract provided that:
The Company may terminate your employment at any time by giving 3 months notice in writing or by the payment of 3 months in lieu of such notice. This does not affect the Company's right to summary dismissal.
On or about 2 June 2006, the respondent offered the applicant a new position as Business Development Manager for Southeast Asia. The applicant claims that Neil Walker, on behalf of the respondent, told him that:
a)the applicant's position would be safe and secure;
b)the repositioning of the respondent’s business in India and South-east Asia would take about three years; and
c)the applicant would be employed by the respondent during that period.
The applicant claims that he agreed to accept the position as business development manager and refrain from seeking other employment in reliance on the representations made by Neil Walker. The applicant also claims that it was a term of his employment with the respondent that he would be given a redundancy payment if his position became redundant. The respondent terminated the applicant's employment on 14 February 2007 on the grounds of redundancy.
The applicant claims that the representations made by Neil Walker were made in trade or commerce and were false, misleading or deceptive in breach of s.52 of the Trade Practices Act 1974 (“the Act”). The applicant claims that, to the extent the representations related to future matters within the meaning of s.51A of the Act, the respondent had no reasonable grounds for making them. The applicant claims that the respondent engaged in misleading or deceptive conduct or conduct that was likely to mislead or deceive in contravention of s.53B of the Act. Additionally, the applicant claims that in breach of contract, the respondent has refused to give him a redundancy payment. The applicant claims damages pursuant to s.82 of the Act for loss of income from 14 February 2007 until June 2009 (being three years after the commencement of the contract) and redundancy pay.
The respondent noted that at 10.09 am on the day the applicant claims Neil Walker made the misrepresentations to him, namely, 2 June 2006, the Executive Assistant and HR Administrator of the respondent sent the applicant an email. The email said:
Hi Duad,
I am confirming that, under the terms of your Contract with Soanar, the notice period is 3 months – ie if the company terminates your employment it must give you 3 months notice, if you resign your position, you must give the company 3 months notice.
If you decide to leave Soanar immediately, as a sign of goodwill, we would pay your June salary and would waive the reimbursement (as per signed agreement) for the Senior Management Training Program you recently attended.
Duad, please understand that it is our preferred option that you continue to work with Soanar by taking up the role of Business Development Manager for ANZ & SEA, under the Marketing Division, reporting directly through to Jarrod Carroll.
Kind regards
Lanie Theodore
Executive Assistant & HR Administrator
Soanar Pty Limited
The test for summary dismissal
The respondent’s application is brought under rule 13.10 of the Federal Magistrates Court Rules 2001. That rule provides as follows:
The Court may order that a proceeding be stayed, or dismissed generally or in relation to any claim for relief in the proceeding, if the Court is satisfied that:
(a)the party prosecuting the proceeding or claim for relief has no reasonable prospect of successfully prosecuting the proceeding or claim; or
(b)the proceeding or claim for relief is frivolous or vexatious; or
(c)the proceeding or claim for relief is an abuse of the process of the Court.
Note For additional powers of the Court in relation to family law proceedings that are frivolous or vexatious, see section 118 of the Family Law Act.
There is also power under s.17A of the Federal Magistrates Act 1999 to summarily dispose of a proceeding. Section 17A provides as follows:
(1) The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a) the first party is prosecuting the proceeding or that part of the proceeding; and
(b) the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding.
(2) The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a)the first party is defending the proceeding or that part of the proceeding; and
(b)the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.
(3)For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:
(a) hopeless; or
(b) bound to fail;
for it to have no reasonable prospect of success.
(4)This section does not limit any powers that the Court has apart from this section.
Section 17A of the Federal Magistrates Act 1999 is in the same terms as s.31A of the Federal Court of Australia Act 1976. In Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd (2006) 70 IPR 146, Rares J considered the effect of s.31A and said the following at [42] to [47]:
[42] I am of opinion that, properly construed, s 31A(2)(b) requires a person moving a motion for summary disposal (the moving party) to satisfy the court that there is no reasonable prospect of the party claiming relief (the plaintiff) successfully prosecuting the proceeding or the part of the proceeding in question. Experience shows that there are cases which appear to be almost bound to fail yet they succeed. As Dixon CJ once said (Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9 at 20):
‘Experience of forensic contests should confirm the truth of the common saying that one story is good until another is told…’
[43] Brennan CJ and McHugh applied that observation in Jackamarra v Krakouer (1998) 195 CLR 516 at 522 [9] to a situation which an appellate court was exercising a discretion to permit a further step to be taken in an appeal that had already been instituted. Obviously, where there is a contested application under s 31A, both parties will be present to explain their case, but not in the context of a trial. The procedure envisaged by s 31A is summary. The concept of a party having ‘no reasonable prospect of successfully prosecuting a proceeding’ has some similarity to the test at common law for determining whether a jury properly instructed could reach a verdict for the plaintiff. That test was authoritatively stated by the Judicial Committee in Hocking v Bell (1947) 75 CLR 125 at 130-131, approving the following statement from the dissenting judgment of Latham CJ (Hocking v Bell (1945) 71 CLR 430 at 441-442):
‘If there is evidence upon which a jury could reasonably find for the plaintiff, unless that evidence is so negligible in character as to amount only to a scintilla, the judge should not direct the jury to find a verdict for the defendant, nor should the Full Court direct the entry of such a verdict. The principle upon which the section is based is that it is for the jury to decide all questions of fact, and therefore to determine which witnesses should be believed in case of a conflict of testimony. But there must be a real issue of fact to be decided, and if the evidence is all one way, so that only one conclusion can be said to be reasonable, there is no function left for the jury to perform, so that the court may properly take the matter into its own hands as being a matter of law, and direct a verdict to be entered in accordance with the only evidence which is really presented in the case.’ [emphasis added] [See also Swain v Waverley Municipal Council (2005) 220 CLR 517 at 522 [9] per Gleeson CJ, 561-562 [128]-[131] per Gummow J and 580 [203], 582-583 [208]-[209] per Kirby J; see also at 531-532 [33]-[34] per McHugh J]
[44] In a case to which s 31A applies, where there is a real issue of fact to be decided in the sense identified in the above principle, and, possibly, where there is a real issue of law of a similar kind, it is obviously appropriate that the matter goes to trial. And, one must be mindful that in Hocking v Bell (1945) 71 CLR at 487, Dixon J said that in effect, every judge who had heard the matter (through four trials, two Full Court appeals and, to that point, the appeal to the High Court) would have formed the view that the plaintiff should have failed had they been able to decide the facts, yet the Privy Council restored the second jury verdict in her favour and so concluded the litigation. This raises a very real question, as to what reasonable prospects are for present purposes.
[45] I am of opinion that in assessing what reasonable prospects of success are for the purposes of s 31A, the court must be very cautious not to do a party an injustice by summarily dismissing the proceedings where, in accordance with the principles in Hocking v Bell (1947) 75 CLR 125, contested evidence might reasonably be believed one way or the other so as to enable one side or the other to succeed. As soon as the evidence may have such an ambivalent character prior to a final determination, I am of opinion that then, as a matter of law, at that point there are reasonable prospects of success within the meaning of s 31A. Unless only one conclusion can be said to be reasonable, the moving party will not have discharged its onus to enliven the discretion to authorize a summary termination of the proceedings which s 31A envisages. In moving the second reading of the bill introducing s 31A (the Migration Litigation Reform Bill 2005) the Attorney-General said that it strengthened ‘… the power of the courts to deal with unmeritorious matters by broadening the grounds on which federal courts can summarily dispose of unsustainable cases’.
[46] In Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146 at 154-155, Dawson, Gaudron and McHugh JJ said that a party should not be shut out from litigating an issue which was fairly arguable and that the power to grant leave to amend should be exercised with that in mind. They observed (189 CLR at 154) that ‘...the ultimate aim of a court is the attainment of justice’. Obviously, s 31A regulates the attainment of justice by creating an entitlement in a party to be protected from claims or defences which fail to meet the threshold prescribed in the section. In granting leave to appeal on a decision involving the application of s 31A, Wilcox J observed in Vans, Inc v Offprice.Com.Au Pty Ltd [2006] FCA 137 at [12] that it was arguable that the effect of s 31A was that there could be summary judgment for an applicant ‘... notwithstanding the possibility that the applicant’s case will break down at trial; in other words, it is now not enough for a party resisting a summary judgment application to seek merely to put the other side to proof’ (his Honour’s emphasis).
[47] GE Capital also argued that s 31A required the court to dismiss a claim or defence based on a predictive assessment of its prospects, even though it may be possible that, had the matter gone to trial, it would have succeeded. I am of opinion that this is not how the section operates. It is engaged only to determine summarily a claim or defence which has no reasonable prospect of success. The purpose of the enactment is to enable the court to deal with matters which should not be litigated because there is no reasonable prospect of any outcome but one. If there is a reasonable danger that a claim or defence could be dismissed under s 31A, which could succeed at a trial, the provision would create miscarriages of justice. It is a key feature of the judicial power under Ch III of the Constitution that the court be in a position to, and in fact does, quell a controversy. The exercise of the judicial power to prevent the substantive agitation of a controversy in which each side has a reasonable prospect of success would defeat, not advance, the ends of justice.
In Commonwealth Bank of Australia (ACN 123 123 124) v ACN 000 247 601 Pty Limited (in liq) (Formerly Stanley Thompson Valuers Pty Limited) [2006] FCA 1416 at [30] Jacobson J summarised the conclusions of Rares J in BostonCommercial as follows:
· In assessing whether there are reasonable prospects of success, the Court must be cautious not to do an injustice by summary dismissal.
· There will be reasonable prospects of success if there is evidence which may be reasonably believed so as to enable the party against whom summary judgment is sought to succeed at the final hearing.
· Evidence of an ambivalent character will usually be sufficient to amount to reasonable prospects.
· Unless only one conclusion can be said to be reasonable, the discretion under s 31A cannot be enlivened.
In Australian and International Pilots Association v Qantas Airways Ltd [2006] FCA 1441, Tracey J said, at [23]:
In dealing with summary termination and strike out applications the Court must assume that the applicant will be able, at trial, to establish its pleaded case and must treat the allegations in the best light for the applicant.
The court, in considering a summary dismissal claim, must have regard to the possibility of further evidence being adduced: Vivid Entertainment v Digital Sinema Australia Pty Ltd [2007] FMCA 157.
I accept that these cases set out the relevant test for the summary dismissal of a claim in the Federal Magistrates Court. The test has been somewhat modified by the introduction of s.17A of the Federal Magistrates Act 1999. It is no longer that the case of the opposing party is utterly hopeless. Rather, the test now is that there is no reasonable prospect of any outcome but one: Boston Commercial at [47].
Authorities on misrepresentation in employment contracts
In Barto v GPR Management Services Pty Ltd (1991) 33 FCR 389, Wilcox J held that misrepresentations by a corporation in the course of negotiating an employment contract with a prospective employee, or negotiating a variation of an employment contract with an existing employee, were capable of falling within s.52 of the Act.
In O’Neill v Medical Benefits Fund of Australia Ltd (2002) 122 FCR 455, the applicant alleged he had relied on a misrepresentation that his employment would be long term. The Full Federal Court (Carr, Moore and Marshall JJ) in that case held that the fact that the applicant had signed a contract providing for his position to be terminable on one month’s notice was not decisive.
Consideration
The respondent argued that the email sent at 10.09 am on 2 June 2006 to the applicant made it abundantly clear that the three months notice provision contained in the contract of April 2005 would continue to apply under any new arrangement involving the applicant.
In his affidavit evidence, the applicant did not specifically address the email or its significance. The respondent’s solicitor swore an affidavit in which he said that the email was sent and he exhibited a copy of it. The respondent did not give any evidence about the circumstances surrounding the email, or how it tied in with the alleged conversations that occurred on 2 June 2006 between Neil Walker and the applicant.
I do not consider that the email provides a complete answer to the claims of misrepresentation. The email was evidently sent by an administrative person, rather than a senior officer of the corporation, although a copy of it was sent to Neil Walker. It was sent relatively early in the day. The alleged misrepresentations may have occurred later in the day, and overtaken the contents of the email.
In the absence of compelling evidence from either party concerning the circumstances surrounding the sending of the email and its place in the discussions about the applicant’s new position, I do not consider that there is no reasonable prospect of any outcome but one. The evidence afforded by the email is strong but not irrefutable, especially in the light of O’Neill. It is appropriate that the matter goes to trial, where direct evidence can be heard from the individuals involved.
Having said that, in relation to s.51A of the Act, the question of whether the respondent had reasonable grounds for making the alleged misrepresentations as to future matters is a matter best left for the trial.
The respondent says that s.53B of the Act applies only to new employees and not to variations of a contract with an existing employee. The applicant says the opposite. This is a question of the interpretation of a statutory provision.
The respondent relies on a decision of the New South Wales Court of Appeal in Stryke Corporation Pty Ltd v Miskovic [2007] NSWCA 72, which concerned whether an action under s.53B of the Act was an action for a tort. At [7], Spigelman CJ said that:
Section 53B of the TPA expressly applies to the period prior to the entry into a contract of employment when it uses the formulation ‘in relation to employment that is to be, or may be, offered by the corporation’.
In Walker v Salomon Smith Barney Securities Pty Ltd [2003] FCA 1099, Kenny J said at [187] that:
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 Australia Pty Ltd (1988) 15 NSWLR 679, at 691-692, per McHugh JA and 696 per Clarke JA; Dawson v Australian Consolidated Reserves Pty Ltd (1983) ATPR 40-374 per Toohey J; and Thomas v Star Maid International Pty Ltd [1999] FCA 911 at [16] per Weinberg J.
As far as I have been able to ascertain, none of the cases mentioned above expressly addresses the question of whether s.53B of the Act might apply to a variation of an existing contract. Given that the matter is to proceed to trial on the s.52 issues, it seems to me to be appropriate to reserve the further consideration of the s.53B question for the trial.
The claim for a redundancy payment is a claim in contract. There is no express provision in the contract of April 2005 for redundancy pay. However, the applicant says that there were internal company documents that set out the respondent’s redundancy policy, and indicated his entitlement to a redundancy payment. He was able to produce only one document that related to this issue. It suggests that in 2002 there was a scheme for some people employed by Hagemeyer to be entitled to redundancy pay. However, it is not apparent that the scheme continued to apply after Hagemeyer was taken over by the respondent.
The respondent argued that John Antouny v ANZAM (Aust) Pty Ltd [2003] VSCA 145 stands for the proposition that a redundancy entitlement cannot be implied in a contract of employment. However, the Court of Appeal of the Supreme Court of Victoria actually said in that case at [15] that a redundancy entitlement under an employee’s award did not lead to an implication of a redundancy entitlement under his contract. Rather, the entitlement under the award was to be enforced under the Workplace Relations Act, or its equivalent. The Court of Appeal noted at [16] that no evidence was called to support the incorporation of a term providing for redundancy pay. That suggests that, if suitable evidence had been forthcoming, a term might have been implied into the contract dealing with the circumstances where there might have been an entitlement to redundancy pay.
It is not surprising that the applicant does not at this stage have the internal company documents that he says support his claim to redundancy pay, given that he is no longer employed by the respondent. However, it is to be anticipated that any such documents will be discovered by the respondent in due course. I do not consider that it would be appropriate to determine the redundancy issue on a summary basis, prior to the inspection of documents.
There is at present no statement of claim to strike out. However, I do not consider that the proposed statement of claim has no reasonable prospect of success, such that leave to file the proposed amended statement of claim should not be given. In all the circumstances, I will give the applicant leave to file an amended statement of claim in the form proposed in the exhibit marked DA1 to the affidavit sworn by the applicant on 8 May 2008. The application filed on 24 April 2008 by the respondent will be dismissed.
I will hear the parties on the question of costs and on the question of the directions to be made for the further conduct of the proceeding.
I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of Riley FM
Associate: Sarah Hession
Date: 29 May 2008
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