AMEC Engineering Pty Ltd v Shanks

AMEC ENGINEERING PTY LTD v SHANKS
[2001] SASC 257
Full Court: Debelle, Williams and Wicks JJ

DEBELLE J I agree with the substance of the reasons of Wicks J. I agree that the appeal should be dismissed.
WILLIAMS J I agree that the appeal should be dismissed for the reasons given by Wicks J.
WICKS J
Introduction
This is an appeal from a decision of a District Court Judge. The learned Judge found there was a contract of employment between the plaintiff, Raymond Thomas Shanks and the defendant AMEC Engineering Pty Ltd and that this contract was wrongfully terminated by the defendant. Accordingly, the learned Judge awarded the plaintiff damages in the sum of $58,787.58, inclusive of interest.
The defendant carried on business as a provider of building maintenance services. It provided these services under contract to various companies, one of which was Kimberley-Clarke of Mount Gambier. From 1992 to 1997 the defendant maintained offices in Mount Gambier and employed a small staff. The plaintiff was the branch manager of this office, managing the Kimberley-Clarke and other maintenance contracts on behalf of the defendant. The plaintiff was not an employee of the defendant. Instead, his services were supplied to the defendant through a contract with a service company controlled by the plaintiff and known as RKS Controls Pty Ltd.
By August 1997 it became apparent that the defendant’s contract with Kimberley-Clarke would not be renewed. In light of this, the defendant decided to close its office at Mount Gambier. Following that decision, the respondent remained in Mount Gambier but worked for the defendant in its Adelaide office, commuting from Mount Gambier to Adelaide at weekends.
In December 1997, Mr Hugh MacDougall had just taken up a new position with the defendant as the manager of its Maintenance and Shut Down Division. This position brought with it responsibility for administering a new contract between the defendant and Western Mining Corporation Ltd (“WMC”) at Roxby Downs and Olympic Dam. By December 1997, the plaintiff was well known to Mr MacDougall. They had known each other since 1994.
During 1997, representatives of the defendant and WMC had met and negotiated a new contract for the provision of maintenance services to WMC at Roxby Downs and Olympic Dam. This contract was known by the parties to it as “the Alliance Contract”. At that time Mr MacDougall took over the administration of that contract.
There was a difference of opinion between executives of the defendant on the one hand, and executives of WMC on the other, as to the status of the Alliance Contract. It had been signed on behalf of the defendant and returned to WMC. It was not, however, signed by that company. Despite that fact, the parties appeared to proceed in their dealings with one another as though the Alliance Contract had been signed.
Contract of employment
In December 1997, while driving home to Mt Gambier from Adelaide, the plaintiff received a telephone call from Mr MacDougall. After some discussion about work for the plaintiff which might be available, Mr MacDougall indicated that the defendant had secured the Alliance Contract between the defendant and WMC and he inquired whether the plaintiff would be interested in managing the contract. He said that the plaintiff could only take on the job as a staff member and not as a subcontractor and that the contract would be for a minimum of two years. In the course of this conversation, the plaintiff indicated that he would discuss the matter with his wife over the weekend.
The plaintiff telephoned Mr MacDougall over the following weekend to obtain additional information so that he could discuss the matter fully with his wife. She was anxious to return to Adelaide as soon as possible. Mr MacDougall indicated that at the end of the two year period, the plaintiff could either continue on at Roxby Downs or return to Adelaide to a position in the defendant company which would be found for him.
On 19 December 1997, the plaintiff met Mr MacDougall in the defendant’s Adelaide office to discuss the proposal in detail. The two negotiated the terms upon which the plaintiff would accept the defendant’s offer of the position of manager of its Roxby Downs branch. Not much detail was provided to the plaintiff with regard to the Alliance Contract. Mr MacDougall did, however, make it clear that there was some disagreement between the defendant and WMC as to the defendant’s long term role at the site. Mr MacDougall also mentioned to the plaintiff that there was some unrest amongst the employees who had previously been sub-contractors.
At the meeting, Mr MacDougall stressed two requirements relating to the Roxby Downs position. First, the plaintiff was required to commit to Roxby Downs for a minimum of two years. After such time there would be scope for the plaintiff to continue working at Roxby Downs or alternatively a position would be made available for him in Adelaide. Secondly, the plaintiff was required to become a member of the defendant’s staff. This latter point was important to the defendant since it had begun implementing a policy whereby its sub-contractors would be moved into staff positions. The plaintiff intimated that this would initially cause him some financial embarrassment because his finances were tied up with RKS Controls Pty Ltd. He also stated that his acceptance of the position would require the closure of a bed and breakfast business in Mount Gambier owned by him and his wife, and which was principally operated by his wife at their home at Mount Gambier. The plaintiff requested that until his Mount Gambier house was sold, he should be in a position to provide services to the defendant through his company, RKS Controls Pty Ltd.
The learned trial Judge found that a compromise was reached between the plaintiff and Mr MacDougall at this point. It was agreed that the plaintiff would accept the position of branch manager of the defendant’s Roxby Downs office for a minimum period of two years. From 1 January 1998 to 31 March 1998, he would provide his services through RKS Controls Pty Ltd. RKS Controls Pty Ltd would be paid at the rate of $80,000 gross per year for this period. From 1 April 1998, the plaintiff would become an employee of the defendant. He would then receive a salary of $80,000 gross per year. Such salary would include a remote site allowance of $25,000. After the two years were completed, it was agreed that the plaintiff could return to Adelaide if he so desired where a position in the defendant company would be found for him. Mr MacDougall stated that a draft letter reflecting their agreement would be prepared subsequently and sent to the plaintiff when he began work at Roxby Downs. It was agreed that the plaintiff would take a short holiday and return to Adelaide on 5 January 1998 for a briefing and then travel up to Roxby Downs.
At the conclusion of the negotiations which took place at the offices of the defendant in Adelaide, Mr MacDougall and the plaintiff shook hands on the deal. Mr MacDougall said that he would draw up a contract and forward it to the plaintiff in due course.
The plaintiff received a letter signed by Mr Keith Wildman, the defendant’s general manager on or about 2 February 1998 at Roxby Downs. Although signed by Mr Wildman, the letter was prepared by Mr MacDougall and embodies the terms agreed to between him and the plaintiff at their meeting in Adelaide on 19 December 1997. These were not however the only terms included in the letter which was, so far as material, as follows:
"AMEC
AMEC Engineering Pty Limited A.C.N. 003 066 715
43-69 Sturt Street Adelaide SA 5000
Phone: (08) 8238 5000 Facsimile: (08) 8238 5001
2/2/98
Raymond Shanks
c/o Olympic Dam Branch
Yudnamutana Street
Olympic Dam
SA         5725
Dear Ray,
This letter is formal confirmation that your employing company will be AMEC Engineering Pty Limited.
To ensure that we both have a clear understanding of the main terms and conditions of employment, we hope that the attached statement dated 2nd February 1998[sic] which applies to your position with us will achieve this objective. These conditions supersede all previous conditions and amendments whether oral or in writing, and are subject to the items detailed below.
Your job title is ‘Branch Manager - Roxby Downs and Environs’
The terms of employment in this position will be a minimum of two (2) years, and you will be reporting to the manager of the maintenance and shutdown division (Mr Hugh MacDougall) based in Adelaide.
...
Your salary with effect from 1 April 1998 is $80,000.00 gross per year, (including a Roxby Downs Allowance of $25,000.00) paid around the 15th of every calendar month, (thus being partly in arrears and partly in advance). Salary reviews will be conducted annually.
...
On your return to Adelaide your Salary will be $55,000.00 gross per year, in a position yet to be confirmed.
We confirm that the notice of termination of employment as stated in the attached ‘Terms and Conditions’ is by monthly agreement.
In the event that this letter or the attached ‘Statement of Terms and Conditions’ creates any concerns for you, please discuss these directly with me as soon as possible.
We look forward to a mutually successful and long term relationship.
We would appreciate your acceptance of this position by your signing and returning the ‘Statement of Main Terms and Conditions’ and ‘Secrecy Agreement’. (One copy for your file is also attached).
Yours sincerely,
[Signed]
KEITH WILDMAN
General Manager
Att:   Statement of main terms and conditions of employment
         Secrecy agreement"
Attached to the letter was the document referred to as the attached “Statement of Main Terms and Conditions of Employment”. So far as is material the terms and conditions of that document were as follows:
"AMEC Engineering Pty Limited
Statement of Main Terms and Conditions of Employment
APPOINTMENT: Branch Manager - Roxby Downs and Environs.
This statement sets out the main terms and conditions of employment for Raymond Shanks as an employee of AMEC Engineering Pty Limited based in Roxby Downs.
___________________________
...
COMMENCEMENT:
Your employment with the AMEC Engineering Pty Limited, commences on 1st April 1998. This statement outlining your main terms and conditions of employment was issued on 2nd February 1998.
...
SALARY:
Your salary is as confirmed in covering letter to you dated 2/2/98 Ref: A:\jor\shanks\loc
SECRECY AGREEMENT:
You are required to keep in confidence all information gained through your employment with the Company for so long as it remains confidential to the Company. You must agree and comply with the Company’s standard secrecy agreement which you are required to sign.
...
TERMINATION OF SERVICES:
A minimum of one months’ notice of termination of employment must be given by either party and confirmed in writing.
...
WORKING HOURS:
Working hours will be 40 hours per week. The Company intends to plan work to minimise the need for working additional hours. However with staff appointments you will be expected to work such hours as are necessary for completion of your duties.
The actual hours of work that comprise the nominal hours, and the lunch period, will be those which are in existence in the particular office where you are based.
Yours sincerely
[Signed]
KEITH WILDMAN
General Manager
I hereby accept the Main Terms and Conditions of Employment as set out herein and place my signature accordingly.
Signed: Raymond Shanks Date: 9/4/98 "
A secrecy agreement was also attached.
The letter asked the plaintiff to accept his position by signing the Statement of Main Terms and Conditions of Employment and the secrecy agreement and returning the same to the defendant’s Adelaide office.
Purported termination of contract of employment
The defendant purported to terminate the plaintiff’s employment contract with the defendant on Tuesday, 14 July 1998. On that day, Mr MacDougall gave the plaintiff a month’s notice. The notice of termination was given to the plaintiff orally. The next day, Wednesday, 15 July 1998, Mr MacDougall wrote to the plaintiff by facsimile transmission. So far as is material, the terms of that communication were as follows:
"Further to our meeting on 14 July, 1998 in the Roxby Downs office and the subsequent termination of your employment please be informed that you are not required to work out your notice period.
You are required to vacate the Roxby Downs office by 12 noon on 15 July, 1998. All keys, mobile phone, company vehicle and any other company property in your possession are to be left at the office.
You have full use of the company residence until close of business on 14 August, 1998. Please advise this office not less than a week prior to the 14 August, 1998 the timing and delivery address, in South Australia for the transfer of your furniture and belongings.
...
Yours faithfully
[Signed]
Manager - Maintenance and Shutdowns"
The facsimile was sent by Mr MacDougall on behalf of the defendant company.
Construction of contract of employment
It is submitted on behalf of the plaintiff that the document signed by him on 9 April 1998 should be construed as only confirming those terms which were orally agreed between the parties on 19 December 1997. He says that they should be construed as incorporating only such terms and conditions of employment as do not conflict with the express terms of the oral agreement. It appears that the plaintiff and Mr MacDougall did not discuss or agree any terms regarding the termination of the contract of employment by either party.
I cannot agree with that contention. This case is no different from most cases where a contract is negotiated by two parties. There is a negotiation during which the principal terms and conditions are discussed and agreed. One party is then left to prepare the written document and the other party is invited to consider the document prepared and to discuss any matters of concern which he or she might have. In this case, such an invitation occurred in the letter of 2 February 1998 where the author said: “We would appreciate your acceptance of this position by your signing and returning the ‘Statement of Main Terms and Conditions’ and ‘Secrecy Agreement’. (One copy for your file is also attached).” It is clear that comment was invited from the plaintiff in respect of the whole employment agreement. The plaintiff should have responded at that time. Instead, on receipt of the letter, the plaintiff put it in a drawer where it remained until he was approached about the matter by Mr MacDougall on or about 19 April 1998. He then took the letter and its attachments from the drawer of his desk, signed the documents where indicated and returned them to Mr MacDougall. The plaintiff was offered an agreement which covered routine topics such as the duration of the contract and rights of termination in addition to matters discussed in December 1997. He should have considered these matters and expressed his view on them if he was not happy with what was being offered to him.
A concession was made at trial by the plaintiff that there could properly be inferred as a term of the contract of employment that the defendant could lawfully terminate such contract for misconduct, neglect, incompetence or unsatisfactory performance.
A deed must be read as a whole in order to ascertain the true meaning of its several clauses. The words in each clause should be so interpreted as to bring them into harmony with the other provisions if that interpretation does no violence to the meaning of which they are naturally susceptible: North Eastern Railway v Hastings [1900] AC 260 per Lord Davey at p 267 (quoting the words of Lord Watson in an unreported case). This rule of construction is applicable to all written instruments and is not limited to deeds: Halsbury’s Laws of England, 4th Ed, vol 12 par 1469; Elderslie Steamship Co v Borthwick [1905] AC 93.
The letter of 2 February 1998 was expressed to be formal confirmation that the employing company would be the defendant. The letter went on to say that the Statement of Main Terms and Conditions of Employment attached to the letter and which applied to the plaintiff’s position with the defendant, would ensure that the plaintiff and the defendant would each have a clear understanding of the main terms and conditions of the plaintiff’s employment with the defendant. The conditions referred to in the statement attached to the letter would supersede all previous conditions and amendments. They would, however, be subject to “the items detailed below”. The words in quotation marks were intended to mean those terms and conditions set out below in the letter of 2 February 1998 rather than terms and conditions set out in an attachment.
For present purposes, one of the “items detailed below” was the requirement that the employment of the plaintiff as “Branch Manager - Roxby Downs and Environs” would be for a minimum of two years from 1 April 1998. The requirement that the plaintiff’s terms of employment as branch manager would be for such minimum period is inconsistent with the requirement contained in the Statement of Main Terms and Conditions of Employment to the effect that a minimum of one month’s notice of termination of employment must be given by either party and confirmed in writing.
It is clear from the terms of the second paragraph of the letter dated 2 February 1998 that the requirement of service for a minimum period of two years as set out in the letter is paramount and over-rides the provision of the Statement of Main Terms and Conditions of Employment to the extent that that document is inconsistent with the terms of the letter to which I have referred. The Statement of Main Terms and Conditions of Employment is for general use by the defendant. It was attached to a letter of engagement which was specifically drafted to meet the needs of a particular situation or the particular needs of either of both of the parties thereto.
The clear intention of the letter is that the plaintiff will serve the defendant for a minimum period of two years at Roxby Downs, and that during that period the plaintiff cannot be removed from his employment with the defendant as Branch Manager - Roxby Downs and Environs - unless there has been misconduct, neglect, incompetence or unsatisfactory performance. After the expiration of the two year period, either party could terminate the agreement on one month’s notice. The qualification relating to misconduct etc. will be discussed later in these reasons.
While the clause in the letter relating to the two year period clearly overrides anything in the Terms and Conditions, there is a difficulty in the letter itself. Early on, the letter makes it clear that the period of employment is for a minimum of two years. However, at the end of the document the following paragraph appears:
"We confirm that the notice of termination of employment as stated in the attached ‘terms and conditions’ is by monthly agreement."
Read literally, this paragraph suggests that a notice of termination can only be given on a monthly basis and also that it can only be given by agreement of both parties. Bearing in mind that the employment agreement, in all probability was not drafted by a solicitor, this may well be the best interpretation that can be placed on this paragraph. Another approach would be to read the paragraph as though “notice” were substituted for “agreement”. The learned trial Judge was of the view that the paragraph was meaningless and that it should not be taken into account in construing the contract of employment.
In my view, regard should be had to the surrounding circumstances in construing the paragraph to which I have just referred. That leads me to a consideration of the parole evidence rule and the exceptions to it. The broad purpose of that rule is to exclude extrinsic evidence (except as to surrounding circumstances) including direct statements of intention (except in cases of latent ambiguity) and antecedent negotiations, to subtract from, add to, or vary or contradict the language of a written instrument: Codelfa Construction Pty Ltd v State Rail Authority of NSW (1981-1982) 149 CLR 337 per Mason J at p 347. In L Schuler A.G. v Wickman Machine Tool Sales Ltd (1974) AC 235 at p 261, Lord Wilberforce expressed the rule in the following terms:
"The general rule is that extrinsic evidence is not admissible for the construction of a written contract; the parties’ intentions must be ascertained, on legal principles of construction, from the words they have used. It is one and the same principle which excludes evidence of statements, or actions, during negotiations, at the time of the contract, or subsequent to the contract, any of which to the lay mind might at first sight seem to be proper to receive."
Evidence of surrounding circumstances is an exception to the rule but prior negotiations leading directly to agreement between the parties to a proposed contract would not be regarded as “surrounding circumstances”.

Applying these principles to the present case, what was said and done at the meeting at the defendant’s office in Adelaide when the terms and conditions of the plaintiff’s employment contract were being discussed, would be inadmissible for the purposes of construing the written contract. However, evidence of the surrounding circumstances would be admissible. These would include what was said and done in the telephone conversation between the plaintiff and Mr MacDougall while the plaintiff was travelling in his car from Adelaide and also in the further telephone conversation during the following weekend between the plaintiff whilst with his wife at Mt Gambier and Mr MacDougall in Adelaide. It would appear to me that anything said between the parties before a decision in principle was taken by the plaintiff to accept the offer of employment at Roxby Downs falls within “surrounding circumstances” and is admissible in evidence as an exception to the parol evidence rule.
On this point, a matter of importance to both parties was the two year period that had been discussed during the telephone conversations referred to in the previous paragraph of these reasons. A minimum period of two years was important to the defendant. The plaintiff would be in breach of the contract if he failed to serve not less than two years as the plaintiff’s manager at Roxby Downs. On the other hand, the two year period was important to the plaintiff and his wife. The plaintiff had a fixed commitment to serve as manager at Roxby Downs for two years. At the end of that time he could either continue on at Roxby Downs or return to Adelaide where a position in the company would be found for him. That is the background of the matter and nothing appears to have occurred subsequently to involve a departure from these basic understandings.
As I have said earlier in these reasons, at the hearing of this action before the learned trial Judge, a concession was made by the plaintiff that in the case of misconduct, neglect, incompetence or unsatisfactory performance on the part of the plaintiff, he could be removed from office as branch manager. Also, if necessary, it should be possible to remove him by implying a term in the agreement enabling him to be removed from his employment in the case of misconduct, neglect, incompetence or unsatisfactory performance utilising the principles set out in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 per Lord Simon of Glaisdale at pp 282-283 giving the opinion of the majority.
If there are two clauses or parts of a deed repugnant to each other the first will be received and the latter rejected unless there is some special reason to the contrary: Bateson v Gosling [1871] LR 7 CP 9, per Willes J at p 12. If in a deed an earlier clause is followed by a later clause which destroys altogether the obligation created by the earlier clause, the later clause is to be rejected as repugnant and the earlier clause prevails: Forbes v Git [1922] 1 AC 256 at p 259. Repugnancy arises where one provision is contrary or contradictory to another or where one provision is inconsistent or incompatible with another. That is the case here. The rule as to repugnancy has been described as an expedient to which the court very reluctantly has recourse, and never until it has exhausted every other means in its power to reconcile apparent inconsistencies: Bush v Watkins (1851) 14 Beav 425 at p 432. In the present case we are not concerned with a deed but rather with a contract in writing. I see no reason why this rule should not be applicable to such an instrument. The rule is subordinate to the general principle that the intention must be ascertained from the entire contents of the document. Hence, when one clause is in accordance with, and the other is opposed to, the real intention, the former must be received and the latter rejected whatever their relative positions: Halsbury’s Laws of England, 4th Ed vol 12 par 1504.
In my opinion, the paragraph in the letter of 2 February 1998 as to notice by monthly agreement to which I have referred should be ignored. It is contradictory to the paragraph dealing with the minimum service period of two years as this paragraph is clearly fundamental to the entire contract.
It was alleged by the defendant in the Notice of Appeal that the learned Judge erred in finding that a contract of employment reached between the parties did not contain a clause allowing the defendant to terminate the plaintiff’s employment on one month’s notice. On that point, I am of the opinion that the learned trial Judge was correct in finding that the defendant could not terminate the plaintiff’s employment on one month’s notice during the two year period in which the plaintiff was required to serve as branch manager at Roxby Downs except in the case of misconduct etc. The first ground of appeal must therefore fail.
The second ground of appeal is discussed by the learned trial Judge in his reasons for judgment. The defendant contends that the learned trial Judge erred in finding an implied term that the plaintiff would be awarded fair treatment in respect of termination of his employment by the defendant. In my opinion, a finding on this point is unnecessary. It seems to me that a fair resolution of the issues in this case can be arrived at without the necessity for implying any such term.
Whether termination wrongful
The notice of termination of the contract would have been valid on 14 July 1998 if the plaintiff was on that date guilty of any misconduct, neglect, incompetence or unsatisfactory performance of such a magnitude as would justify his dismissal.
In the days before he left for Roxby Downs, the plaintiff was briefed by Mr MacDougall and others. He knew that there were some difficulties with the Alliance Contract and that some of the defendant’s staff were not happy that they had ceased to be sub-contractors and had been made employees of the defendant instead. During his briefing, it was made known to the plaintiff that there was a need for a new branch manager to devise and implement management systems to better control and track the defendant’s work for WMC and the charging for that work. The learned trial Judge found that the plaintiff’s briefing in relation to these matters was quite inadequate to prepare him for what he found when he arrived at Roxby Downs. The learned Judge was of the view that the plaintiff’s briefing was quite inadequate because the Adelaide management were themselves unaware of the extent of the problems with which the plaintiff was to be confronted at Roxby Downs. In addition, it appears that there was a considerable intensity of ill-feeling by the workforce against the defendant as their employer. There was a perceived loss in wages and in status by virtue of their ceasing to be sub-contractors. A number of undesirable practices have developed, including the consumption of alcohol during working hours and the practice of some workers charging WMC for hours which were not worked. As the plaintiff set about changing undesirable work practices a measure of resentment developed towards him and complaints from time to time were made about his management style to the Adelaide office of the company.
In relation to disputes between the defendant and its workforce as to increases in wages and in relation to ridding the defendant company of unsatisfactory work practices, the learned trial Judge found that the plaintiff acted as any reasonable branch manager would have acted in the circumstances. Most of these matters called for the assistance of a senior executive in the company with the necessary authority to enter into negotiations with the workforce and to make prompt decisions.
Difficulties were being experienced with the management systems which were in place at WMC for work to be done, for the defendant to do that work and invoice WMC appropriately and for payment to be made to the defendant by WMC. These matters needed resolution. In particular, before the plaintiff went to Roxby Downs the defendant expected that a new software programme would be written in order to cope with the management systems necessary for the Roxby Downs operation. Importantly such a programme had to be compatible with the programme being used by WMC. A further difficulty arose from the fact that no-one on the staff of the defendant or WMC fully understood the programme that was being used at the time by WMC. No computer programme was being written to deal with these matters during the plaintiff’s time at Roxby Downs. As a result, he devised and put in place a labour intensive manual system as a stop gap measure.
There was also the problem of the collection of moneys from WMC for work done. There was criticism of the plaintiff for not being sufficiently diligent in the collection of outstanding moneys. A difficulty here arose from the fact that it was the practice of the company that once a job had been invoiced, that invoice was sent by the branch to the defendant company’s Adelaide office, and it was that office’s responsibility to collect payment on the invoice. The Roxby Downs branch manager would not necessarily know whether or not a particular invoice had been paid.
The learned trial Judge found all of these criticisms to be unjustified. It was not alleged in the Notice of Appeal that he erred in making such a finding.
Criticisms were made at the trial about the alleged inadequacy of the plaintiff’s reporting to the company’s Adelaide office. The learned trial Judge correctly found these criticisms to be unjustified and accepted the plaintiff’s evidence that Mr MacDougall did not inform him of any shortcomings in the content or format of his monthly reports.
An officer from the Adelaide office of the defendant visited Roxby Downs on 12 and 13 May 1998 for the purpose of identifying any areas of administration that could be improved upon, and to investigate and report on specific problems encountered in Adelaide in certain areas whilst ensuring that the branch was complying with company procedures. The report (“the Bishop report”) was critical of WMC’s internal systems and identified a number of areas in administration and office procedure where improvements needed to be made. The report concluded with a finding that the plaintiff had had an uphill battle since taking over as branch manager at Roxby Downs.
The learned trial Judge found that nothing the plaintiff did in respect of the management systems applying at Roxby Downs during his time there as branch manager, or his reporting to the Adelaide office, constituted misconduct, neglect, incompetence or unsatisfactory performance by him. The learned Judge found that the plaintiff acted as any reasonable branch manager would have done in the circumstances. I am of the view that it was open to the learned Judge to make this finding.
As I have said earlier, the Alliance Contract was executed by the defendant but not by WMC. The plaintiff was briefed in January 1998 that the services that the defendant would provide to WMC through the plaintiff as branch manager would be pursuant to the Alliance Contract. Under that contract, the defendant would charge for its services at an hourly rate plus materials.
The learned trial Judge found that soon after the plaintiff arrived at Roxby Downs he was confronted by two senior executives of WMC responsible for the administration of the Alliance Contract. They had different views as to how the defendant should provide maintenance services to WMC. At a meeting in early March 1998, Mr Biss, an executive of WMC told the plaintiff that he required the defendant to do maintenance work for fixed lump sum prices. He required the defendant to quote for such jobs and to prepare “scopes of work” for other maintenance work to be performed by the defendant. Scopes of work were to be prepared at no cost to WMC. The plaintiff considered this to be inconsistent with the Alliance Contract. On the other hand, Mr Biss took the view that there was no such contract as the document executed by the defendant had not been executed by WMC.
The plaintiff discussed these issues with Mr MacDougall and was told by him that he could give fixed quote prices to WMC but that he should charge for the preparation of the quote. The plaintiff passed this onto Mr Biss who did not accept the suggestion. Mr MacDougall then spoke and wrote to Mr Biss indicating that the defendant would perform work for WMC only on the basis of the Alliance Contract which provided for hourly charge-out rates. Mr Biss did not accept this. He asked the plaintiff to do a scope of work for some part of WMC’s operations in Roxby Downs and indicated to the plaintiff that once the scope of work had been prepared it would be put to tender by WMC. The plaintiff said that he would not do so without charging for preparing the scope of work. Mr Biss said to the plaintiff that he would take the defendant off his tender list.
As the Alliance Contract gave the defendant exclusive rights to provide maintenance services to WMC at Roxby Downs, this was clearly inconsistent with the contract. Mr MacDougall was informed of the position. He then put the defendant’s position on the contract to senior executives of WMC. That position was that the contract would be adhered to and work would be performed at hourly rates. Scopes of work would be prepared. However, there would be a charge for such works. The learned Judge found that Mr MacDougall instructed the plaintiff to continue to do business with WMC on that basis. That finding is not challenged.
A further order was placed by WMC and a written scope of work was requested free of charge. The plaintiff declined to accept the order on that basis. Subsequently Mr Biss telephoned the plaintiff and indicated that the defendant would not be invited to tender for the work because it was not interested in writing the scope of work free of charge.
On 9 June 1998, the plaintiff wrote to the WMC Site Service Engineer, Mr Geoff Marks, making what he described as an official complaint. As a direct result of that letter, senior executives of WMC sought to meet senior executives of the defendant in Adelaide. Mr MacDougall and the defendant’s commercial manager in Adelaide, Mr Garry Wise, were present on behalf of the defendant.
After the meeting, Mr MacDougall and Mr Wise agreed that the message given by WMC was that a difficulty had arisen with respect to the plaintiff as branch manager at Roxby Downs, and that there might be some risk to the Alliance Contract if the plaintiff remained as branch manager.
Of course, all of this overlooked the fact that the terms of the Alliance Contract were a matter for Mr MacDougall and not one for the plaintiff as branch manager to address.
Following the meeting on 19 June 1998, Mr MacDougall determined that the plaintiff would have to be removed as branch manager of the defendant’s branch at Roxby Downs. On 26 June 1998, in furtherance of that decision, Mr MacDougall sent a facsimile to the plaintiff setting out a number of generalised complaints. The terms of the facsimile in question were as follows:
"Subject
Performance Review
Message
Further to our discussion earlier today over your performance in relation to our operations at the Roxby Downs Branch, see below the concerns AMEC have for areas of the business which have not improved despite numerous reviews;
.Inability to allay client concerns over on-site relationships, where there remains a perception of a lack of effective interaction and ability to integrate with their requirements
.Inability to demonstrate clear and effective guidance to build trades into an effective team with resultant reputation loss in provision of day to service response
.Inability to meet self-imposed timelines on administration reports and lack of cost control reporting required to accurately inform management of the financial status of the branch.
In view of the above it now becomes necessary to inform you that if you cannot achieve substantial improvements in these areas over the next two weeks a review of your employment status will take place which may result in the termination of your employment.
During this period you will be required to liaise with, and report to, Mr Chris Crooks, [an executive of the defendant] who will spend as much time on site as is practicable, to assist you in identifying specific areas which need urgent attention. All issues relating to overhead expenditure, operational strategies and system changes will require approval by Mr Chris Crooks prior to implementation.
Regards
[Signed] Hugh MacDougall
Manager - Maintenance and Shutdowns"
The plaintiff telephoned Mr MacDougall to seek clarification of the facsimile received. Mr MacDougall’s response was that management was not happy with the plaintiff’s performance. No further clarification of the complaints contained in the facsimile was given.
Mr MacDougall advised Mr Crooks, an executive of the defendant, of the text of the facsimile and asked him to undertake a monitoring, advisory and decision-making role in assisting the plaintiff to achieve the necessary improvements required to allow the branch to function according to management expectations.
Mr Crooks went to Roxby Downs on 29 June 1998. He said that he had been orally briefed by Mr MacDougall and that he was to go to Roxby Downs to give the plaintiff any assistance that may be requested. In fact, no such assistance was requested and none was provided.
While at Roxby Downs, Mr Crooks spoke to officers of WMC and personnel of the defendant for the purpose of providing a report for the general manager of the defendant about the operations of the Roxby Downs branch. The work done for the purposes of the report was conducted at the request of Mr MacDougall. It seems that at all materials times Mr Crooks was unaware of the Bishop report, and did not take it into account when preparing his own report in relation to the branch.
If the defendant was really concerned to ensure that the performance of the plaintiff was improved over the next two weeks, one would have expected that the facsimile containing the three dot points dated 26 June 1998 would be followed by a meeting of some sort to discuss the plaintiff’s performance with a view to ensuring that improvements would be made. The learned trial Judge accepted the plaintiff’s evidence on this point and no executive of the defendant had ever directly raised with him the matters referred to in the facsimile in question. No objection to this finding was taken on appeal. Plainly, in themselves, the three dot point paragraphs were too vague to be of much benefit to the plaintiff. The facsimile was followed up by a telephone call initiated by the plaintiff. Although he requested elucidation, it appears that following the telephone conversation in question, he was none the wiser.
As I have already said, the plaintiff was given one month’s notice orally of termination of his employment with the defendant.
The learned trial Judge found that the termination of the plaintiff’s employment was not confirmed in writing as contemplated by the main terms and conditions. He continued as follows:
"Whilst Mr MacDougall’s facsimile transmission of 15 July 1998 referred to the plaintiff’s termination the day before, it was not written to confirm the termination. It was written to inform the plaintiff that he was not required to work out his notice period. Although in his Defence AMEC alleged that ‘it terminated the plaintiff’s contract of employment by one month’s payment of wages in lieu of notice as required by the contract of employment’, the Main Terms and Conditions do not provide for payment in lieu of notice of termination."
This does not appear to be a matter dealt with in the pleadings or the subject of the grounds of appeal. In his reasons for judgment the learned trial Judge made the following findings:
"I am satisfied and find that nothing the plaintiff did whilst he was the manager of AMEC’s Roxby Downs branch, insofar as his relationship with Western Mining and its personnel was concerned, could be said to constitute misconduct, neglect, incompetence or unsatisfactory performance by the plaintiff or any reasonable branch manager in the position of the plaintiff.
My conclusion is that at 14 July 1998 there were no grounds upon which AMEC could properly, lawfully or justifiably terminate the plaintiff’s contract of employment."

The learned trial Judge concluded by saying that for those reasons he found the plaintiff’s contract of employment with the defendant to have been wrongfully terminated. In my opinion, the learned trial Judge was entitled to make the findings to which I have just referred and to conclude that the plaintiff’s contract of employment with the defendant was wrongfully terminated by Mr MacDougall on behalf of the defendant.
For the reasons already given the plaintiff is entitled to damages for breach on the part of the defendant of the contract of employment, together with interest on the amount of such damages
Damages
The fifth ground of appeal is to the effect that the learned trial Judge erred in finding that the respondent had any right to damages. I am of opinion that the learned trial Judge did not err on that point. The quantum of damages is another matter and it would appear that that matter is not in issue on this appeal as quantum as such is not dealt with in the Notice of Appeal.
In the circumstances, I am of opinion that the appeal should be dismissed.

[2001] SASC 257

9 August 2001