Australian National Hotels Pty Ltd v Jager
[2000] TASSC 43
•11 May 2000
[2000] TASSC 43
CITATION: Australian National Hotels Pty Ltd v Jager [2000] TASSC 43
PARTIES: AUSTRALIAN NATIONAL HOTELS PTY LIMITED
(ACN 009 477 552)
v
JAGER, Louie Peter
TITLE OF COURT: SUPREME COURT OF TASMANIA (FULL COURT)
JURISDICTION: APPELLATE
FILE NO/S: FCA 41/1998
DELIVERED ON: 11 May 2000
DELIVERED AT: Hobart
HEARING DATES: 15, 16 March 2000
JUDGMENT OF: Underwood, Crawford and Evans JJ
CATCHWORDS:
Employment Law - The contract of service and rights, duties and liabilities as between employer and employee - Duration and termination of employment - Generally and legislation affecting - Legislation expressly prescribing period of notice - A period of "reasonable notice" cannot be implied.
Aust Dig Employment Law [11]
Contracts - General contractual principles - Construction and interpretation contracts - Implied terms - Generally - Necessity for implication of term - Whether a term could be implied where it was provided for by legislation.
Aust Dig Contracts [105]
Industrial Relations Act 1984 (Tas), ss46, 47.
Byrne v Australian Airlines Ltd (1995) 185 CLR 410, applied.
Breen v Williams (1996) 186 CLR 71; BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 180 CLR 266; Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; Liverpool City Council v Irwin [1977] AC 239; Hutt v The Cascade Brewery Co Ltd A99/1991; Neville Jeffress Advertising Pty Ltd v Barlow (No 2) A81/1993, followed.
REPRESENTATION:
Counsel:
Appellant: K B Proctor
Respondent: L Kaufman, J A V Buckley
Solicitors:
Appellant: Murdoch Clarke
Respondent: Wilson Dowd
Judgment Number: [2000] TASSC 43
Number of Paragraphs: 33
Serial No 43/2000
File No FCA 41/1998
AUSTRALIAN NATIONAL HOTELS PTY LIMITED
(ACN 009 477 552) v LOUIE PETER JAGER
REASONS FOR JUDGMENT FULL COURT
UNDERWOOD J
CRAWFORD J
EVANS J
11 May 2000
Orders of the Court
Appeal allowed.
Judgment in favour of the respondent against the appellant set aside and in lieu thereof, judgment entered for the appellant.
Serial No 43/2000
File No FCA 41/1998
AUSTRALIAN NATIONAL HOTELS PTY LIMITED
(ACN 009 477 552) v LOUIE PETER JAGER
REASONS FOR JUDGMENT FULL COURT
UNDERWOOD J
11 May 2000
I have had the advantage of reading the reasons for judgment of Evans J. I agree with them and the order that he proposes should be made in this appeal.
File No FCA 41/1998
AUSTRALIAN NATIONAL HOTELS PTY LIMITED
(ACN 009 477 552) v LOUIE PETER JAGER
REASONS FOR JUDGMENT FULL COURT
EVANS J
11 May 2000
The respondent sued the appellant, his employer, for damages arising from the termination of his employment. When terminating the respondent's employment, the appellant paid him an amount equal to six months' salary described as a redundancy payment.
The learned primary judge found that it was an implied term of the employment contract that the appellant would give the respondent reasonable notice of its termination, the length of the notice to be determined by agreement or otherwise in accordance with the respondent's status, length of service and contribution to the interests of his employer. His Honour implied this term into the contract from the conduct of the parties. He found the appellant in breach of this implied term. His Honour concluded that the Industrial Relations Act 1984 ("the Act"), s47(2), did not preclude the existence of such an implied term arising from conduct although he was of the view that by reason of that provision a similar term could not be implied by law.
The learned primary judge determined that a reasonable period of notice of termination was two years and on this basis the respondent was awarded damages of $130,000.
The appellant has appealed against the learned primary judge's decision. The first issue raised by the appeal is whether a term that the appellant would provide the respondent with reasonable notice of the termination of his employment could be implied into the contract of employment when the Act, s47(2), provides that employment is terminable by either party on one month's notice. The relevant provisions of the Act are:
"PART III - AWARDS
Division 2 - Provisions in respect of industries or employment not otherwise subject to award or registered agreement
Application of Division
46 This Division applies to the employment of a person whose terms and conditions of employment are not -
(a) prescribed by or under any Act or Act of the Commonwealth; or
(b) regulated by an order, award, determination or agreement having effect under any Act or Act of the Commonwealth.
47 (2) Subject to subsection (3), a term or period of service of employment to which this Division applies that is of indefinite duration is terminable by either party by -
(a) a week's notice, if the wages are payable weekly;
(b) a fortnight's notice, if the wages are payable fortnightly; or
(c) a month's notice in any other case."
The learned primary judge found that the terms of the respondent's employment were not prescribed by any State or Federal Act or any award or agreement having effect under such legislation. He also found that the period of the respondent's employment was of indefinite duration and that the respondent was paid monthly. On the basis of these findings, which have not been challenged by the respondent, s47(2)(c) applied to the respondent's employment.
The learned primary judge said the following in relation to the impact of s47(2) on implying a term as to reasonable notice into the contract:
"Implied Term
The original contract of employment contained no provision as to the terms of termination. The agreement was varied from time to time as the plaintiff advanced through the corporate structure, and the contract modified accordingly. The plaintiff contends that absent express agreement, there ought to be implied, by conduct or law, into the contract a term that any termination (without fault) be accompanied by reasonable notice …. The issue of term implied by law will be dealt with separately since it involves considerations of the Industrial Relations Act 1984 ('the Act'), s47. The pleadings also claim that the terms were express but the evidence does not permit certainty or definition which in any way addresses the circumstances of this case. The claim, based on the existence of an express term, is rejected.
Term Implied by Conduct
… The relevant pleadings state:
'7 It was an implied term of the agreement as varied from time to time that the Defendant be entitled to terminate same upon giving the Plaintiff reasonable notice or payment in lieu of notice.
PARTICULARS
(i) The term is implied by law.
(ii) The term is just and equitable.
(iii) The term does not contradict any express term of the contract.
(iv) The term would have been obvious to both parties.
(v) The term was necessary to give business efficacy to the agreement.
...
There can be little doubt that as the plaintiff advanced through the corporate hierarchy, the contract was determined more by performance, commitment and results. There was a mutuality of responsibility, undefined, but inherent to the contractual relationship. No job description of the defendant could define the qualities of judgment or prescience, yet they are qualities most valued by management. Performance can be assessed by objective standards but do not take into account timing or luck. A competent management may hold a company together during bad times, whilst the performance figures show loss. An incompetent one may show good return because of the timing of a change in consumer demand. It is impossible to reduce those qualities or characteristics into a precise contractual form. Conversely, it is impossible to define 'good faith' or 'adequate terms' where an employer seeks, without cause, to terminate employment for reasons of corporate harmony or other goals unrelated to the performance of an individual. Mutuality is essential whilst its precise translation into legal terms is complex and often impossible. In the case of the defendant, it attempted to achieve resolution of some of those indefinable terms by the completion of a 'staff training manual' dated July 1991 (P1.1). There is some doubt as to whether it replaced an earlier document, although it does show amendments dated 1989, but it matters not since the Court is satisfied that it formed part of the contract of employment between the plaintiff and defendant as of 15 February 1994. The relevant portions of the document state:
'17 TERMINATION
Employment is a contract governed by legislation and industrial awards and agreements.
Common law has always insisted that employment should not be terminated wrongly eg without reasonable notice, except in the case of misconduct which warrants summary dismissal.
17.1 Redundancy
When termination of employment occurs because of redundancy the award provides for severance pay, the amount of which is linked to the employees period of service.
...
17.4 Payment on termination
The Personnel Department will be advised of the resignation or dismissal of the employee by the department head. The department will then prepare a staff termination form for the Pay Office. Termination pay will be calculated in accordance with the relevant award provisions.'
The payment, in lieu of notice, afforded to the plaintiff was determined by an officer of the defendant and had not been a matter of discussion. The promotions of the plaintiff and the role assigned to him in the absence of Hurley, warrant the conclusion that the contract of employment was varied so as to contain terms objectively appropriate to the new relationship (Federated Mutual Insurance Company of Australia, Limited and Another v Sabine [1920] SALR 284, Meek v Port of London Authority [1918] 2 Ch D 96). In such a case, any term concerning notice ought be defined in accordance with the relationship of the parties as of the date of termination. Its existence and extent ought be implied by reference to the role and standing of the employee within the organisational structure (Quinn v Jack Chia (Australia) Ltd [1992] 1 VR 557). The determination of the Court is that the agreement, cl 17, is a term from which it can be implied that the plaintiff was entitled to 'reasonable notice to be determined by agreement or otherwise in accordance with the status, length of service and contribution to the interests of the employer.'
The plaintiff was not afforded reasonable notice. The manner and form of termination of contract was deplorable and the arrogant assumption by the defendant that some unnamed, non-responsible officer within the corporate structure could best determine a payment in lieu of notice is contrary to the mutuality of the contractual relationship. The action by Hurley in stating the amount of payment in lieu of notice is itself an acknowledgment that the defendant was in breach of its own term and had itself quantified the amount of damages payable with respect to such breach. The cause of action is made out.
Term Implied by Law
The plaintiff made answer in interrogatories that the terms of his employment were not prescribed by any state or federal Act, or any award or agreement having effect under such legislation, and further, that his wages were paid monthly. The Act 1984, s46, makes provision for such circumstance and s47 further provides:
'(2) Subject to subsection (3), a term or period of service of employment to which this Division applies that is of indefinite duration is terminable by either party by —
(a) a week's notice, if the wages are payable weekly;
(b) a fortnight's notice, if the wages are payable fortnightly; or
(c) a month's notice in any other case.'
Given that the plaintiff commenced employment in 1972, the defendant relies upon the provisions of earlier enactments of the Industrial Relations Act 1976 and the Master and Servant Act 1856, which contain comparable provisions. The plaintiff contends that the Act, s47, is not a term of the contract of employment and relies on the authority of Byrne v Australian Airlines Limited (1995) 69 ALJR 797, in support of the proposition that there is an implied term in the contract of employment that reasonable notice ought be provided before termination and that such is not affected by the Act, s47. The plaintiff's case is that the Act, s47, does not constitute a term of the contract of employment and that since the actual contract is silent, a term is implied by law that any termination ought be one affording reasonable notice. In Byrne, employees, who had been dismissed for acts of theft, sought relief claiming that their dismissal was harsh, unjust or unreasonable, relying on a breach of a clause of the Transport Workers (Airlines) Award 1988. The court declined to import the clause into the contract of employment or to convert statutory rights into such contract. In their joint judgment, Brennan CJ, Dawson and Toohey JJ recognised the distinction between an obligation created by statute and one arising from a contract. A statutory term may become a term of the contract by agreement between the parties (True v Amalgamated Collieries of W A Limited [1940] AC 537) and a person may not contract out of rights and obligations imposed by statute (Josephson v Walker (1914) 18 CLR 691). But the existence of a statutory provision does not become 'crystallised custom' (Byrne at 801). To that extent, the authority of Byrne does not advance the plaintiff's case insofar as it depends on a term implied by law. However, the authority does not preclude the finding that a term can be implied by virtue of the conduct of the parties and that if such a term can be found it is not vitiated by the Act, s47. The parties may, by express agreement, provide for a period longer than that provided by statute, and if such a term can be implied by conduct, the same applies. If neither are present, then the Act provides the statutory right and precludes any other term from being implied by law. This approach is not inconsistent with that taken by Wright J in Hutt v The Cascade Brewery Company Limited A99/1991, although in that case the court was not required to consider the question of term arising by conduct.
The conclusion is that the Act, s47, precludes a finding that there ought be implied by law a term in the contract that reasonable notice ought be given which exceeded one month, or that the word 'reasonable' ought be construed as a period exceeding one month. On either approach, the plaintiff ought not succeed on this ground. However, the Act, s47, does not preclude the existence of an implied term arising from conduct."
The learned primary judge, in my view, correctly rejected a claim that it was an express term of the contract that the appellant would provide the respondent with reasonable notice of its termination. It was contended that such a term could be extracted from cl 17 of the staff training manual. That clause, like many other clauses in the manual, is informative, not prescriptive. It is not phrased in a manner which opens the way to a conclusion that it articulates a term of a contract of employment with any particular employee or class of employees. Employees of the appellant were engaged in a wide variety of positions in several jurisdictions. Tasmania is not the only jurisdiction in which the appellant carries on business. It is inevitable that the terms of employees' employment varied depending upon the applicable legislation in the jurisdiction in which they were employed, any industrial awards which governed their employment and the specific terms (if any) upon which they were engaged. If the termination of an employee's employment was not governed by legislation, an industrial award, or an agreement, it was subject to the common law and the employment was terminable on reasonable notice. The information contained in cl 17 reflects this situation. In my view, that information cannot be construed as an express term to any particular effect in the respondent's contract of employment.
His Honour found that whilst a term as to reasonable notice could not be implied into the contract of employment by law, it could be implied from conduct. I am unable to identify the difference between the implication of that term from conduct and the implication of that term from law which caused his Honour to conclude that s47(2) impacted on the latter so as to deny the implication of the term but did not have a similar impact on the former.
His Honour implied the term as to reasonable notice from cl 17 of the manual. He characterised this as the implication of a term from conduct. To my mind, that characterisation is more appropriate to the implication of a term from a past course of dealings between parties. That is not what occurred here. His Honour implied the term from the facts relevant to the respondent's employment arrangement and ultimately cl 17 of the staff training manual. I characterise this as the implication of a term from facts (this is often referred to as implying a term to give business efficacy to a contract) as distinct from the implication of a term by law.
Due to the variety of views which have been expressed about the appropriate categorisation of implied terms, any attempt to categorise them may be illusory. In Liverpool City Council v Irwin [1977] AC 239 at 253 - 254, Lord Wilberforce nominated four categories of implied terms, but observed that they are really shades of a continuous spectrum of implied terms. In Breen v Williams (1996) 186 CLR 71 at 102 - 103, Gaudron and McHugh JJ drew a distinction between terms implied in fact and terms implied by law, and observed that the distinction between the terms can tend in practice to merge imperceptibly into each other.
Broadly speaking, in recent Australian decisions the terminology used to categorise the sort of implied terms which are relevant in this case is:
· a term implied in fact or to give business efficacy to the contract; and
· a term implied by law referable to a class of contract.
As to these categories, I refer to Byrne v Australian Airlines Ltd (1995) 185 CLR 410, McHugh and Gummow JJ at 440, Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337, Mason J at 345 - 346, Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10, Mason CJ at 30, and Castlemaine Tooheys Ltd v Carlton & United Breweries Ltd (1987) 10 NSWLR 468, Hope JA at 486. In Breen v Williams (supra), Gaudron and McHugh JJ said (omitting the citations) at 102 - 103:
"The common law draws a distinction between terms which are implied in fact and terms which are implied by law. Leaving aside terms that are presumed to apply because of the custom of a trade or business, the courts will only imply a term in fact when it is necessary to give efficacy to the contract. A term implied in fact purports to give effect to the presumed intention of the parties to the contract in respect of a matter that they have not mentioned but on which presumably they would have agreed should be part of the contract. A term implied by law on the other hand arises from the nature, type or class of contract in question."
The criteria for determining whether a term is implied to give business efficacy to a contract are detailed in the majority judgment in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283, where their Lordships said:
"… for a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying'; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract."
Where, as here, the contract is oral, or partly oral, care must be taken to avoid the rigid application of these cumulative criteria when determining whether a term should be implied; Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41, Deane J, at 121 and Hawkins v Clayton (1988) 164 CLR 539, Deane J, at 571. The flexibility called for by this caution does not obviate the need to establish that the implication of the term is necessary for the effective operation of the contract. In Byrne v Australian Airlines Ltd (supra), at 422, Brennan CJ, Dawson and Toohey JJ adopted the following formulation of the test to be applied from the decision of Deane J in Hawkins v Clayton (supra) at 573:
"The most that can be said consistently with the need for some degree of flexibility is that, in a case where it is apparent that the parties have not attempted to spell out the full terms of their contract, a court should imply a term by reference to the imputed intention of the parties if, but only if, it can be seen that the implication of the particular term is necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case. That general statement of principle is subject to the qualification that a term may be implied in a contract by established mercantile usage or professional practice or by a past course of dealing between the parties."
As to terms implied to give business efficacy to a contract, Mason J, as he then was, said in Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 346:
"Accordingly, the courts have been at pains to emphasize that it is not enough that it is reasonable to imply a term; it must be necessary to do so to give business efficacy to the contract. So in Heimann v The Commonwealth (1938) 38 SR (NSW) 691, at 695, Jordan CJ, citing Bell v Lever Brothers Ltd [1932] AC 161, at 226, stressed that in order to justify the importation of an implied term it is 'not sufficient that it would be reasonable to imply the term. … It must be clearly necessary'. To the same effect are the comments of Bowen LJ in The Moorcock (1889) 14 PD 64, at 68; Lord Esher MR in Hamlyn & Co v Wood & Co [1891] 2 QB 488, at 491 - 492; Lord Wilberforce in Irwin [1977] AC, at 256; Scrutton LJ in Reigate v Union Manufacturing Co (Ramsbottom) [1918] 1 KB 592, at 605 - 606."
Whilst BP Refinery (Westernport) Pty Ltd provides a convenient summary of the criteria for implying a term in fact, I have not found a similarly convenient authority on the criteria for the implication of a term by law into a particular class of contract. I am, however, satisfied that a criterion is that the term must be necessary. In Miller v Hancock [1893] 2 QB 177 at 181, Bowen LJ said in relation to the implication of an implied term into a contract between a landlord and a tenant that:
"… it must have (been) intended by necessary implication, as a basis without which the whole transaction would be futile …".
In Liverpool City Council v Irwin (supra) Lord Wilberforce said in relation to the implication of a term in a contract between a landlord and tenant at 254:
"… it is necessary to define what test is to be applied, and I do not find this difficult. In my opinion such obligation should be read into the contract as the nature of the contract itself implicitly requires, no more, no less: a test, in other words, of necessity. The relationship accepted by the corporation is that of landlord and tenant: the tenant accepts obligations accordingly, in relation inter alia to the stairs, the lifts and the chutes. All these are not just facilities, or conveniences provided at discretion: they are essentials of the tenancy without which life in the dwellings, as a tenant, is not possible. To leave the landlord free of contractual obligation as regards these matters, and subject only to administrative or political pressure, is, in my opinion, inconsistent totally with the nature of this relationship."
In Mears v Safecar Security Ltd [1983] 1 QB 54, Stephenson LJ (who was agreed with by the other members of the court) said of the implication of a term into a contract of employment at 78:
"… the obligation must be a necessary term; that is, required by their relationship. It is not enough that it would be a reasonable term."
In Scally v Southern Health Board [1992] 1 AC 295, Lord Bridge of Harwich said in the course of considering a term to be implied into a contract of employment at 307:
"A clear distinction is to be drawn in the speeches of Viscount Simonds in Lister v Romford Ice and Cold Storage Co Ltd [1957] AC 555 and Lord Wilberforce in Liverpool City Council v Irwin [1977] AC 239 between the search for an implied term necessary to give business efficacy to a particular contract and the search, based on wider considerations, for a term which the law will imply as a necessary incident of a definable category of contractual relationship."
In Byrne v Australian Airlines Ltd (supra), McHugh and Gummow JJ said, at 449 - 450:
"There is force in the suggestion that what now would be classified as terms implied by law in particular classes of case had their origin as implications based on the intention of the parties, but thereafter became so much a part of the common understanding as to be imported into all transactions of the particular description. The matter is put as follows in Halsburys Laws of England, 4th ed (1974) vol9, par354, :
'Perhaps the truth is that the ambiguous terminology enables the courts in the first instance to imply terms on the basis of the intention of the parties ... but later there comes a time when the particular implied term has become so much a part of common practice that the courts begin to import it into all transactions of that type as a matter of course; and the result is a rule of law of the type considered in this paragraph.'
This understanding of the matter is consistent with the proposition that terms 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.
…
Many of the terms now said to be implied by law in various categories of case reflect the concern of the courts that, unless such a term be implied, the enjoyment of the rights conferred by the contract would or could be rendered nugatory, worthless, or, perhaps, be seriously undermined, Nullagine Investments Pty Ltd v Western Australian Club Inc (1993) 177 CLR 635 at 647 - 648, 659. Hence, the reference in the decisions to 'necessity'.
…
This notion of 'necessity' has been crucial in the modern cases in which the courts have implied for the first time a new term as a matter of law."
A term will not be implied in fact as being necessary for the business efficacy of a particular contract or implied in law as being necessary for a class of contract if the parties to the contract have expressed a contrary intention. The fifth criterion detailed in BP Refinery (Westernport) Pty Ltd v The Shire of Hastings is that the implication of a term must not contradict any express provision of the contract. McHugh and Gummow JJ said in the passage from Byrne v Australian Airlines Ltd quoted in paragraph 19 above, that a term will not be implied by law into a contract if the parties expressly excluded it or it is inconsistent with terms of the contract. Instances of a court rejecting the implication by law of a term as to giving reasonable notice of termination into a contract of employment because of the contrary intention of the parties are NSW Cancer Council v Sarfaty (1992) 28 NSWLR 68, and McClelland v Northern Ireland General Health Services Board [1957] 2 All ER 129.
In Byrne v Australian Airlines Ltd (supra) it was contended on behalf of two employees that a provision of an award governing their employment made under the Industrial Relations Act 1988 (Cth) was an implied term of their contract of employment. The provision was cl 11(a) which provided:
"Termination of employment by an employer shall not be harsh, unjust or unreasonable. For the purposes of this clause, termination of employment shall include terminations with or without notice."
The court held that the award provision was not implied into the contract of employment because it was not necessary for the operation of the contract. Brennan CJ, Dawson and Toohey JJ said at 420:
"[The appellants] rely upon the statutory force given to the award and say that, because the relationship between the parties is contractual, the provisions of the award ¾ or at least some of them including cl 11(a) in this case ¾ become terms of the contract enforceable by the use of contractual remedies as well as the remedies provided by statute.
A right to the payment of award rates is imported by statute into the employment relationship, which is contractual in origin, and, express promise apart, it is only in that sense that it can be said that award rates are imported into the contract of employment. The award regulates what would otherwise be governed by the contract. … The importation of the statutory right into the employment relationship does not change the character of the right. As Latham CJ points out in his judgment in Amalgamated Collieries of WA Ltd v True (1938) 59 CLR 417 at 423, the legal relations between the parties are in that situation determined in part by the contract and in part by the award. …"
Their Honours proceeded to deal with the implication of a term based upon the presumed intention of the parties and in that context cited BP Refinery (Westernport) Pty Ltd v Shire of Hastings. After quoting the passage from the judgment of Deane J in Hawkins v Clayton set out in par13 above, their Honours said, at 422 - 423:
"That is, we think, the appropriate test to apply in this case and the answer must be that it is not necessary to imply a term in the form of cl 11(a) for the reasonable or effective operation of the contract of employment in all the circumstances. 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. Clause 11(a) may alter that position, but there is no reason to presume that any alteration was intended by the parties to form a term of their contract, nor any reason to impute such an intention to them. Plainly, the fact that the inclusion of such a term would, if it were breached, support an action for damages by the employee is no ground for saying that the term is necessary for the reasonable or effective operation of the contract. The contract is capable of operating reasonably and effectively in the absence of such a term and in the presence of an award provision offering limited remedies in the event of breach. The argument that cl 11(a) constituted an implied term of the contract of employment should be rejected."
McHugh and Gummow JJ approached the appellant's contention that the award provision was an implied term of the contract of employment in a similar way, although, as appears from the following passage, they proceeded on the basis of the respondent's concession that the law implied into the contract an obligation to give reasonable notice of a dismissal. At 452 - 453 they said:
"In the present appeal, the appellants relied upon this concept of necessity. Their submission was that employment contracts were a well-recognised 'class' of contract. That was conceded by the respondent. So also was the proposition that the law imported various incidents into the relationship of employment, one of them being the entitlement of the employer to terminate the employment at will on giving reasonable notice and to dismiss summarily for misconduct. It was then submitted that the existence of the Award, and in particular cl 11(a), 'required' reformulation of that incident of the relationship by importing, in terms, the provisions of cl 11(a).
However, there is no 'necessity' for such a step in the sense in which that term was applied in cases such as Irwin and Scally. The contract of employment is not, from the viewpoint of the employee, rendered nugatory if the existing provisions thereof remains, as a matter of contract, to operate concurrently with the regime established by the Award and deriving its authority from statute.
There is nothing to suggest that the contracts of employment were not workable and effective before the introduction into awards of provisions such as cl 11(a). This is not a case where a provision such as cl 11(a) is necessary lest the contract be deprived of its substance, seriously undermined or drastically devalued in an important respect."
It follows from the approach taken by the members of the High Court in Byrne v Australian Airlines Ltd that as s47(2) applies to the parties' contract of employment with the effect that the contract is terminable on one month's notice by either party, there is no opening for the implication of a term as to the giving of reasonable notice of the termination of the respondent's employment into the contract, it not being necessary.
This view is consistent with the decision in Brackenbridge v Toyota Motor Corporation Australia Ltd (1996) 67 IR 162. In that case, Beazley J followed Byrne v Australian Airlines Ltd when concluding that a term that an employee's employment was only determinable on reasonable notice should not be implied into a contract of employment governed by an award which provided for the periods of notice the employer was to give upon termination.
The conclusion I have reached on the effect of s47(2) on the parties' contract of employment is consistent with three decisions, to which I will refer, and the views expressed in the chapter headed "Employment", in the Australian commentary on Halsbury's Laws of England, 4th ed C602A and C607 and in the Law of Employment, 4th ed, 164, .
In Hutt v The Cascade Brewery Co Ltd A99/1991, Wright J considered a claim by an employee for damages arising from the termination of his employment. The contract of employment was of indefinite duration and it was not subject to any express term about the period of notice to be provided on termination. The plaintiff was paid six months' salary in lieu of notice. He sued his employer, asserting an implied term that he was entitled to reasonable notice of the termination of his employment which he claimed to be twelve months. The employer relied on the Act, ss46 and 47 as to which Wright J said, at 9:
"It seems to me that the present sections are designed to introduce certainty into the giving of notice as between employer and employee in any situation in which an award is inapplicable or there is no express agreement between the parties. It is plain that the plaintiff's employment with the defendant company was of indefinite duration. Accordingly, it seems to me that in accordance with s47(2)(c) such employment was terminable by either party upon one month's notice. This is not a statutory provision which can be said to be designed for the benefit of one party to an employment contract rather than the other. S.47(2) is a provision which creates mutual rights and obligations on the part of both employer and employee."
At page 10, his Honour added:
"I think that in accordance with s47(2) his employer would have discharged its statutory liability (had it paid him one month's pay in lieu of notice)".
In Neville Jeffress Advertising Pty Ltd v Barlow (No 2) A81/1993, Zeeman J, at 4 said:
"Counsel for the defendant submitted that the Industrial Relations Act 1984, s47(2) operated so as to imply into the contract of employment between the parties a term that the period of service of the defendant's employment was terminable by either party by one month's notice. He further submitted that the plaintiff, by terminating the defendant's employment with immediate effect, was in breach of that implied term notwithstanding the fact that a month's salary was then paid, and that a consequence of that breach was that the defendant was relieved of his obligations to comply with the covenant.
…
In essence, s47(2) re-enacts s37B(2) of the Industrial Relations Act 1975, which in turn re-enacted the Master and Servant Act 1856, s6. The only substantial difference between the last-mentioned provision and the equivalent provisions contained in the later Acts is that the former only applied to servants of particular categories. The parties appear to have assumed that s47(2) applied to the defendant's employment although there was no specific evidence that the defendant's employment was employment to which the relevant Division applied. Having regard to the stance taken by the parties and the nature of the defendant's employment as a relatively senior executive, I proceed on the basis that s47(2) has application. The contract of employment made no provision as to when salary was payable. It merely provided for the annual rate of salary. Section 47(2)(c) therefore had the effect, at least in the absence of any provision to the contrary in the contract of employment (and there is none), that the employment could be terminated by either party by a month's notice. Section 47(2) is facilitative only. It does not purport to prohibit the termination of employment otherwise than in accordance with its terms. In the absence of that provision it might have been arguable that the nature of the defendant's employment was such that it would have been a breach of an implied term of the contract only to terminate on reasonable notice for the plaintiff to terminate it on notice as short as one month."
In Holt v Musketts Timber Sales Pty Ltd (1994) 54 IR 323, the plaintiff claimed damages for the failure of his employer to give him reasonable notice of the termination of his employment. The contract of employment contained no express provision about its termination. The plaintiff claimed to be entitled to reasonable notice of the termination at common law. In dismissing the claim, Northrop J said of an employee whose employment was governed by s47(2) and who was paid weekly, at 329:
"The common law position in Tasmania is affected by the provisions of the Industrial Relations Act 1984 (Tas), which have been in operation since about the middle of the last century. I was informed by counsel that these provisions are novel to Tasmania and Queensland. The relevant sections are ss46 and 47.
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What is of importance is that, on its face and in law, s47(2) confers a right on an employer, and for that matter an employee, to terminate a contract of employment by giving one week's notice if wages are payable weekly. That is the effect of s47(2)(a) on the facts of this case where the employee was paid on a weekly basis. It does nothing more than that, namely, to give a right to terminate an employment on the giving of one week's notice."
Northrop J did not consider whether s47(2) would prevail over an expression of contrary intention in the contract of employment. Both Wright J in Hutt and Zeeman J in Neville Jeffress Advertising Pty Ltd accepted that it would not. Subject to this qualification, the decisions in Hutt, Neville Jeffress Advertising Pty Ltd and Holt are authority that an obligation to give reasonable notice of the termination of a contract of employment cannot be imported into a contract which is subject to s47(2).
In the face of s47(2), a term cannot be implied into the respondent's contract of employment requiring the appellant to provide the respondent with reasonable notice of its termination. In result, the appellant did not breach a term of the contract when it provided the respondent with six months' pay in lieu of notice of the termination of his employment. That payment was in excess of the appellant's obligations to the respondent, pursuant to s47(2). Accordingly, it is not necessary for me to turn to the other grounds of appeal. I would allow the appeal, set aside the respondent's judgment against the appellant and order the entry of judgment in the action in favour of the appellant.
File No FCA 41/1998
AUSTRALIAN NATIONAL HOTELS PTY LIMITED
(ACN 009 477 552) v LOUIE PETER JAGER
REASONS FOR JUDGMENT FULL COURT
CRAWFORD J
11 May 2000
I also agree with the reasons for judgment of Evans J and the orders he proposes should be made.
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