Balsdon v Murray Irrigation Ltd

[2007] HCATrans 406

[2007] HCATrans 406

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S14 of 2007

B e t w e e n -

ANTHONY BALSDON

Applicant

and

MURRAY IRRIGATION LTD

Respondent

Application for special leave to appeal

GLEESON CJ
GUMMOW J
KIRBY J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 3 AUGUST 2007, AT 12.34 PM

Copyright in the High Court of Australia

MR T.V. HURLEY:   If it please the Court, I appear on behalf of the applicant.  (instructed by Nicholas Rolfe & Associates)

MS A.P. STENMARK, SC:   If your Honour pleases, I appear with MR R. MOORE for the respondent.  (instructed by Ebsworth & Ebsworth)

GLEESON CJ:   Ms Stenmark.  You got a message, did you, from the Registry?

MR HURLEY:   We did, your Honour.

MS STENMARK:   Your Honour, we have those pages.  We both prepared lists and, in fact, fortunately they were the same.

GLEESON CJ:   All right, good.

MS STENMARK:   I think we are just going to hand up the one that my friend has.

KIRBY J:   I got them earlier.

MR HURLEY:   Yes, your Honour, a bundle was delivered entitled “Transcript, exhibits and submissions relevant to Pages 18 and 19 of the Application Book”.

GLEESON CJ:   Yes.

MR HURLEY:   Your Honour, this application seeks special leave from a decision of the New South Wales Court of Appeal.  There is a minor question about extension of time where there is no issue about ‑ ‑ ‑

GLEESON CJ:   Is that opposed, Ms Stenmark?

MS STENMARK:   No, I have read Mr Rolfe’s affidavit.  I do not take any issue with that, your Honour.

GLEESON CJ:   All right.

MR HURLEY:   Your Honour, we rely particularly on section 35A(a)(ii) of the Judiciary Act where there is a difference of opinion between two courts and the grant of special leave in those circumstances.  As the Court will apprehend from ‑ ‑ ‑

GLEESON CJ:   I am interested in the factual basis – this is the reason for the message that you got – on which it is said that this issue of law arises.  Can I just mention that if you look at the reasoning of the primary judge on page 19 the finding of fact that she made was at line 18 to 20:

I am satisfied he was entitled to expect renewal of the two yearly contract of employment until 2011.

I am just at the moment not entirely sure what that means as a proposition of fact.  That does not mean he was legally entitled to have his contract renewed, does it?

MR HURLEY:   No, it was an expectation, your Honour.

GLEESON CJ:   What kind of entitlement is that talking about if it is not a legal entitlement?

MR HURLEY:   An entitlement to expect – an expectation that this would go on.

GUMMOW J:   Are we talking then about a loss of a chance?

MR HURLEY:   Yes, your Honour.

GUMMOW J:   We have to have a finding that there was a chance and that it has been lost, I suppose.

MR HURLEY:   We submit there is, your Honour.  Do your Honours have ‑ ‑ ‑

GUMMOW J:   Is that what is relied upon there to indicate that there was a chance that it has been lost?  This entitlement to expect, is that the chance, a high chance, in other words?

MR HURLEY:   Yes, your Honour, a high chance, a very high chance ‑ ‑ ‑

KIRBY J:   I thought you relied on Hadley v Baxendale, that it is not expressed in terms of a loss of a chance but that the law looks to what would probably have happened.  Loss of chance is a very tricky area and this Court has sort of been avoiding it for a long while.  I think you are in dangerous territory urging loss of chance and I did not believe it really to be a loss of chance type case.  It is a Hadley v Baxendale case.  Was it probable that if the issues as to his alleged misconduct had not arisen, which are now to be put out of mind, he would have continued to work until 2011?  Is that not the way you ran the case?

MR HURLEY:   It is, your Honour, and that was the uncontradicted evidence before the trial judge.

KIRBY J:   In the additional material we have just received the plaintiff asserts that principle at paragraph 16.3 of the written submissions and I understood the defendant to agree to it in citing the case of Kilburn at paragraph 45 of the defendant’s submissions on page 21.

MR HURLEY:   Your Honour, the best evidence of this is the evidence that was given by the Chief Executive Officer of the defendant, which is at page 11 of the bundle of documents that has been given to your Honours at line 7.  This question is put, “What I’m suggesting to you is that” ‑ ‑ ‑

GLEESON CJ:   Who was Mr Warne?

MR HURLEY:   He is the Chief Executive Officer.

GLEESON CJ:   Of Ms Stenmark’s client?

MR HURLEY:   I beg your pardon?

GLEESON CJ:   He is the Chief Executive Officer of your opponent’s client?

MR HURLEY:   Yes, your Honour, I am sorry.  He gave evidence on behalf of the respondent.  It was put to him in cross-examination:

What I’m suggesting to you is that if the plaintiff had not suffered the loss of employment that he did on 14 January 2002 the probabilities are that his contract would be renewed as all these others have been and would continue to be renewed into the future?

And his answer was:

Subject to his performance.

GLEESON CJ:   Which he explained in the next answer.

MR HURLEY:   Which he qualified in the next answer, your Honour.

GLEESON CJ:   Yes, well, he certainly did not answer the question “yes”.

MR HURLEY:   Well, we submit, your Honour, that ‑ ‑ ‑

GLEESON CJ:   What were the serious doubts about a number of issues?

MR HURLEY:   Only that, your Honour, that if your Honour goes to the next page 12 in re-examination at line 55 we submit the issues he expressed there were:

Well primarily I was very upset that he wouldn’t talk to me and secondly, until today, most of those allegations have not ‑ ‑ ‑

GLEESON CJ:   Sorry, you have skipped over a previous answer, “Would you have renewed his contract?”  Answer, “No.”

MR HURLEY:   No, but that, your Honour, relates to the next answer, primarily he was upset “he wouldn’t talk to me” which are the reasons that my client was dismissed that both courts have found were in breach of the contract.

GLEESON CJ:   What we are trying to get clear, Mr Hurley, is the factual basis upon which the proposition of law that you want to argue is to be considered and what we are looking for is some finding of fact by the trial judge or some uncontested evidence that constitutes the factual foundation for the proposition of law you want to argue.  What is the fact that you say was found by the trial judge or is established by uncontested evidence that is the basis of the legal principle for which you contend?

MR HURLEY:   Your Honour, the finding of fact is at page 19 of the application book where your Honour started.

GUMMOW J:   That is all there is, is it not?

MR HURLEY:   In the terms of the primary judge, yes, your Honour.  We submit that finding is one that he expected and would in the normal course have remained in employment ‑ ‑ ‑

GLEESON CJ:   The words are, “he was entitled to expect renewal”.  What do you take that to mean?

MR HURLEY:   Your Honour, that he was entitled to expect renewal subject to performance until 65.

GLEESON CJ:   You mean legally entitled?

MR HURLEY:   An almost certain expectation, your Honour, yes, but not in terms of the express terms of the contract, but an expectation that was implicit in the contract.

GLEESON CJ:   Is that a finding that it was more probable than not that his employment contract would have been renewed?

MR HURLEY:   Yes, your Honour, we submit it is, that what her Honour is there expressing, she is accepting the submissions that were put to her by the plaintiff.

KIRBY J:   I am surprised you have not read to the Court what is on page 1 of the bundle where he says:

Q.       So between November 1970 and the time you were dismissed in January 2002 were you promoted?
A.       I was promoted 14 times.  There was ten times within the Government organisation and f times within the Murray Irrigation.

Q.       So far as you were aware until 9 November 2001 you were happy in your employment?
A.       Very, I was a very dedicated employment employee.

and so on.  So he worked for them for 33 years, or the predecessor and them for 33 years, and it was only when this allegation came up that a problem appeared to arise in his employment.

MR HURLEY:   Yes, your Honour.  In that context, your Honour, we say that his re-employment in future contracts, biennial contracts, to his 65th birthday was near to a certainty and that is what her Honour is expressing at the application book page 19.

KIRBY J:   Mr Warne at page 12 says that he would not have renewed the contract but that, when it is explained, is because he was very upset about these allegations and the fact that after the allegations were made against him, quite reasonably, the applicant said that he was not going to be making statements until the matter had been cleared up by the police, which it was, in his favour.

MR HURLEY:   Yes, your Honour, it was, and so therefore we submit, your Honour, that what her Honour finds at page 19 is a finding that it was highly probable, as highly probable as it could be, that his contracts would be renewed until his 65th birthday.

GUMMOW J:   She identifies at page 19, line 38 as “Loss of opportunity”, which is why I used the expression I did:

Loss of opportunity to enter into contracts of employment between 2003 and 2012.

How was that sum arrived at?Just tell me shortly.

MR HURLEY:   If your Honour goes within this bundle to pages 16, 17 and 18, these are the submissions that were put on behalf of the plaintiff and your Honour will see at paragraph 16.8 the plaintiff relied on the second limb of Hadley v Baxendale and referred at 16.9 to the decision of the Federal Court, Commonwealth v Amann Aviation.  Paragraph 16.10 asserts:

there is no evidence to contradict his claim that he could realistically expect the renewal of his contract.

Paragraph 16.11, your Honour, reveals how the sum was calculated.  It was done by a form of discounting the present value of the contract.

GUMMOW J:   The present value of the present contract?

MR HURLEY:   The present value of the present contract, so there was a two year contract; for the first one 80 per cent, for the next two years 60, and so on down.  There was other evidence before the Court within the bundle at pages 4 and 5 of a financial planner which projected income over periods of time and assumed increases of wages growth and came to a much higher figure.  But what was put to her Honour was what the Court finds at court book 17.  While I am responding to Justice Gummow’s comments, the other figures that are on court book page 19 also are there expressed in the bundle at page 17.  So the figure of $88,332 comes from what is called the Peppin report, which is Exhibit J, the loss of long‑service leave in the sum of $22,000 is also set out in the Peppin report which was Exhibit J and which is in the bundle.

KIRBY J:   Can I ask you a question, and it is in a sense a practical question?  The criminal law rightly requires that criminal charges against people be proved beyond reasonable doubt.  The police found that the criminal events were not prosecutable and I do not know the basis on which they found that.  Sometimes people cannot be proved to have misconducted themselves but an employer that has a three‑yearly or two‑yearly renewable contract might take advantage of the fact that they agree that if a person was not subject to being prosecuted criminally but they are just still not happy, and with a two or three‑year contract they say, well, that is it, we are not going to have him around, we are not happy.  Now, was that sort of case ever run or was the justification and only justification for the termination the criminal charges which the police decided not to prosecute?

MR HURLEY:   We say the latter, your Honour, that the criminal charges were the basis for the decision, the decision was made on 14 January that was the end of the matter, 14 January 2002.

KIRBY J:   It would be pretty unfair of an employer to take that view but it can be taken sometimes I am sure in the real world out there.  Do you say that case was not run?

MR HURLEY:   No, your Honour, it was ‑ ‑ ‑

KIRBY J:   That, well, the police decided that but that is the criminal onus and we have got to put up with this person.  We do not want to have somebody around.  It upsets fellow employees and ‑ ‑ ‑

MR HURLEY:   That was never put, your Honour, upsetting fellow employees.  The only thing that was put was at the bottom of page 12 where Mr Warne says, “I was very upset”, the allegations were not answered and they “have not been answered to my satisfaction”.

KIRBY J:   That was the not answer whilst he was subject to the police charges.

MR HURLEY:   Yes, your Honour, and that is the way the matter was run before her Honour below.  The relationship between the parties ended on 14 January and that was the end of the matter.  Your Honour, the document contains the remaining submissions that were put in this bundle, but in the Court of Appeal it was said there was no evidence that there was any expectation that the contract would be renewed.  We submit there is three pieces of evidence, the first of which is the clause 1 that Justice Bryson referred to and sets out in his judgment which asserts that the contract of 2001 was one where the employment was renegotiated.  This was not a situation where a contractual relationship of employment was created but is one where the contractual relationship was renegotiated.

The second point, your Honour, is the matrix of the dealings between the parties in the 30 years that preceded it and the third evidence was the two parts of evidence that I have taken your Honours to where both the plaintiff and Mr Warne on behalf of the defendant, in our submission, gave evidence that the plaintiff had a very high expectation that his contract would be continued until the retiring age of 65.  “Based on my service”, according to the plaintiff ‑ ‑ ‑

GUMMOW J:   The question is, if he did have it, was it a well-founded expectation?  It takes two to tango.  How do you measure up to the evidence of Mr Warne in the second extract on page 12?

MR HURLEY:   Because, your Honour, that is Mr Warne responding to the matters that caused the contract to be breached.  This was the fourth contract where my client’s employment had been renegotiated in sequence and, we submit, that fact is a powerful indicator that he had the expectation that subject to performance it would continue until 65.

GLEESON CJ:   Is that a convenient time, Mr Hurley?

MR HURLEY:   It is, your Honour.

GLEESON CJ:   We will adjourn until 2.15.

AT 12.50 PM LUNCHEON ADJOURNMENT

UPON RESUMING AT 2.20 PM:

GLEESON CJ:   Yes, Mr Hurley.

MR HURLEY:   Your Honour, before lunch I was taking your Honour to some parts of the application book which establish that the loss claimed by the applicant, which is the loss of the opportunity to renew his employment, was established by the evidence.  Now, your Honour, before lunch if I used the word “chance”, that was in error.  The case put by the applicant is as in the outline of argument, it is loss of the opportunity to continue in employment by performing his duties and thereby ‑ ‑ ‑

GUMMOW J:   That assumes there was an opportunity.

MR HURLEY:   Well, your Honour, we submit that those passages in the evidence that I have taken your Honours to, the history of the dealings of the parties, and clause 1 of the agreement establish ‑ ‑ ‑

GUMMOW J:   The question is whether opportunity means certainty and it obviously does not.  If it does not mean certainty, you have to start evaluating something, do you not?

MR HURLEY:   And we submit that the primary judge did that and was entitled to do that.

GLEESON CJ:   Evaluated it at 100 per cent.

MR HURLEY:   She evaluated it at page 19.

GLEESON CJ:   At 100 per cent.

MR HURLEY:   At 100 per cent.

GLEESON CJ:   There was no discounting, was there, against the possibility that some further unpleasantness might have developed.  She awarded the damages.  She calculated the damages on the basis that he would have continued in employment until 2012.

MR HURLEY:   She actually awarded a sum, your Honour, that includes a discount.

GLEESON CJ:   The discount is for the present value, is it not?

MR HURLEY:   No, the discount is for those chances, your Honour, that what your Honour had said ‑ ‑ ‑

GLEESON CJ:   Contingency.

MR HURLEY:   The contingencies that it was only loss of an opportunity, not loss of a certainty.

GLEESON CJ:   Then she must have been valuing a chance if she discounted it for chances.

MR HURLEY:   Your Honour, the term that was in the contemplation of the parties we say when they entered into it was, as both parties expressed, that the contract would be renewed on satisfaction of – each contract would be renewed on satisfactory performance by the plaintiff but that cannot be a certainty into the future and the damages that the plaintiff sought were damages of that loss of that chance of entering into future agreements by virtue of the breach of the contract by the defendant.

KIRBY J:   It cannot be a certainty, but after 33 years and 14 promotions and long-term service it would at least be open to the judge to conclude there was a pretty high probability.

MR HURLEY:   That is what we say, your Honour, yes, that after ‑ ‑ ‑

GLEESON CJ:   What did she conclude?

MR HURLEY:   That he was entitled to expect renewal and, we submit, that finding, entitled to expect renewal, includes within it entitled to expect that there would be offers made that on satisfactory performance ‑ ‑ ‑

GLEESON CJ:   When she calculated the value of the damages, did she calculate it on the basis of a certainty or a high probability and, if so, what probability?

MR HURLEY:   We say, your Honour, on a high probability and the award of damages was reduced to reflect that it was a prognostication of what was to take place in the future.

GUMMOW J:   That is not right, is it?  Look at page 19, the figure there is $319,677, right, under item 2?

MR HURLEY:   Yes, your Honour.

GUMMOW J:   Then go to 16.11 of the written submissions at page 17 of the material we have been supplied that is the same figure there, is it not?

MR HURLEY:   Yes, your Honour.

GUMMOW J:   “Damages equal to the present annual value of the contract”, et cetera, “discounted”.  It was just a discounting for the value of money.

MR HURLEY:   No, your Honour, it is not discounting the value of money, it was discounting the possibilities that might eventuate.

GUMMOW J:   It does not say that, does it?

KIRBY J:   Well, was anything argued in the trial that some discount had to be allowed for the fact that he might for other reasons entirely different from the alleged illegality fall out of favour with the employer?

MR HURLEY:   If your Honour goes to page 28 of the document in front of you, what was put is there described in line 6:

Now, your Honour at 16.11 the plaintiff submits your Honour he’s entitled to find that he had a diminishing chance of renewing his contract through the following five contractual cycles.  We submit that there’s an eighty per cent chance he would have renewed his contract in 2003, a sixty per cent chance in 2005, thirty per cent chance in 2007, a ten per cent chance in 2009 and a five per cent chance in 2011.

Her Honour asks how that calculation is done and it is responded that it is to reflect the diminishing chance of the contract being renewed.

KIRBY J:   What was the respondent’s case?

MR HURLEY:   The respondent’s case, your Honour, simply was that it would never happen because the ‑ ‑ ‑

KIRBY J:   The contract was for a three year – was it a three or two‑year period?

MR HURLEY:   Two years, your Honour.

KIRBY J:   Two‑year period, and they would have terminated this man who had worked for 33 years, 14 promotions, and they would have done it – leave aside completely the alleged criminal act, they would have just done it out of the air, it would have come out of the air.

MR HURLEY:   First of all they said, your Honour, he was entitled to three month’s notice, alternatively balance of the term only to 6 April 2003, and that was it, your Honour.  The respondent’s submissions, your Honour, are in here at page 31 in the document.  The written submissions, your Honour, are at page 21.

KIRBY J:   I did not take the respondent’s submission, at least by quoting Kilburn, to be different in principle with your submission:

The measure of damages for wrongful dismissal is, prima facie, the amount that the plaintiff would have earned had the employment continued according to contract, including the value of benefits such as allowances or bonus or car –

and so on.  So it is a question of what would have happened, not that there was a legal entitlement to finish it after two years but what would have happened if he had not fallen foul of this apparently erroneous allegation of criminal activity which the police dropped.

MR HURLEY:   Yes, your Honour, that is ‑ ‑ ‑

GLEESON CJ:   Thank you, Mr Hurley.  Yes, Ms Stenmark.

MS STENMARK:   Thank you, your Honour.  Perhaps if I could just deal with the expectation matter first which seems to be of some concern.  My friend says that it was in contemplation of the parties at the time the contract was entered into that it would be renewed on satisfactory performance by the plaintiff.  There is no evidence of that.

KIRBY J:   I thought that was what Mr Warne said.  Yes, he would be renewed subject to satisfactory performance.

MS STENMARK:   Actually, he was asked then and there, your Honour.  There was no evidence as to what was in the contemplation of the parties at the time the contract was entered ‑ ‑ ‑

KIRBY J:   This was a man who had worked for you for 33 years, or you and your predecessor, and he had been promoted 14 times.  He says he was a good employee, he was happy in his employment, there was no suggestion to him that he was not until the allegations of criminality were raised.

MS STENMARK:   Well, your Honour, that may be, but if your Honour goes even to the pages that your Honour has, page 10, you must remember that this company was privatised in 1994 so different things would then happen from being a government department or government instrumentality.  If you look there at the top of that page:

Well we’ve been through dramatic change since 1994.  There were 265 staff and there are now only 122.

It also further sets out on that page that a couple of other senior people in executive positions have been terminated.

KIRBY J:   But did Mr Warne ever say that there was something else in this man’s employment record that led him – leave aside the criminal allegations – to a likelihood that he would not have been renewed?

MS STENMARK:   The matters that he raised in the letters that were sent to him ‑ ‑ ‑

KIRBY J:   That was that the applicant would not come and have a discussion with him whilst he was subject to criminal proceedings.

MS STENMARK:   But the matters that were raised in that gave him concern and, in fact, your Honour, in the letter in which he was terminated, which is in January 2002, eight matters were raised, two of which only referred to the criminal proceedings.  If I take you to page 11, it says, “Subject to his performance” which Mr Hurley took you to, he would have been renewed subject to performance.  Even if he had come and answered them in his employment and continued, there was some serious doubts about a number of issues.  Your Honours, even if he expected to remain in the employ of the respondent until whenever time, he cannot recover any compensation for the non‑realisation of that expectation because the respondent never assumed any legal obligation to do it.  The contract was very clear ‑ ‑ ‑

GLEESON CJ:   Could I ask you, just before you go on to the legal point that you are about to come to, to explain the evidence at the bottom of page 12 of this additional material that we have got in the last two lines?  The evidence of Mr Warne where he says, “until today, most of those allegations have not been answered to my satisfaction.”  “Today” is presumably the date on which he is being questioned.

MS STENMARK:   Yes, your Honour.  I assume that, your Honour.

GLEESON CJ:   What are the allegations there referred to?

MS STENMARK:   Your Honour, there were allegations of unsatisfactory supervision, allowing company property to be used and not toted up, allowing certain property to disappear, allowing work to be carried out which there was no supervision, invoices were rendered and there was no work done to cover the invoice work, allowing employees and others to take company property without any record of it.

GLEESON CJ:   Suppose as a matter of fact that Mr Warne was being quite wrong-headed about his lack of satisfaction in relation to those allegations and suppose the contract came to an end and there was a discussion about renewal and Mr Warne said, “No, those allegations have not been answered to my satisfaction and I am not going to renew the contract”, what would have been the consequences there?

MS STENMARK:   The parties would have gone their own way.  It is a simple contract that says your contract will expire on 6 April 2003.

KIRBY J:   Hadley v Baxendale does not just look at the legality, it looks at the probabilities of what will happen.  An employee of such longstanding who says he was a good employee, set aside the bribes and favouritism and so on which were the subject of the police investigation, the question is whether it was open to the primary judge and whether the Court of Appeal erred in taking away a calculation based on the assumption that he would have just gone on as he had gone on.You would have the onus, would you not, to show that something different would have intervened to warrant terminating such a longstanding employee?

MS STENMARK:   Your Honour, all we would have is not some evidentiary onus to raise the fact that we were going to terminate him or sack him.  The onus is from go to whoa on the plaintiff.  He has to prove the case or the damages which he wants the Court to award.  Your Honour, something that seems to have been overlooked is this.  My friend says that it was incontrovertible evidence that this man would work with this employer until he was 65.  I take you to page 1, which is the evidence of Mr Balsdon, the plaintiff, the applicant in these proceedings, which is page 34 of the transcript:

HURLEY:   Q.   As at 9 November –

and that was the day he was charged –

what was your intention in relation to your employment with the defendant?
A.   I would expect my contracts to be renewed based on my service to the company, until the retiring age of 65 or until such time as I felt that I could maybe go –

“alone” I assume that is to be –

loan consulting or whatever.

So his own evidence does not even back up the fact that he will stay there.  His own evidence is, “I am going to work till 65.  I expect that I will work till 65, but where I work and with whom I work and by whom I am employed or whether I am a self-starter for my own consulting, I do not know”.

KIRBY J:   That presents a question of fact for the trial judge to determine and she said, “I am satisfied he was entitled to expect renewal of the two yearly contract until 2011”.  In the face of the long drawn out agony of the arguments concerning the entitlement in law to terminate it is very unlikely that her Honour was saying that he had a legal entitlement under the contract to work until 2011.  Obviously, she was assessing what he said, assessing it against his 33 years service, 14 promotions, and by saying “expect renewal” she was saying “I expect in fact that he would have been renewed until 2011”.  Now, that is her conclusion.  Why did the Court of Appeal alter that?

MS STENMARK:   The Court of Appeal found, as I think the Chief Justice raised in the beginning, that the defendant or the ‑ ‑ ‑

KIRBY J:   They were mesmerised by the legal entitlement to terminate, but that is not Hadley v Baxendale.  It requires you look to what will probably ‑ ‑ ‑

MS STENMARK:   The probable result.  I accept that, your Honour.  My friend then comes back to it and says that he relies on the second limb as to what was in the contemplation of the parties at the time the contract was made as to the probable reach, and there is no evidence, no evidence.  But more importantly, your Honour, and this is raised in our written submissions, my friend in the Court here is now trying to run a different case and saying that he was deprived of the advantage of being the incumbent and some sort of commercial advantage, and apart from that idea never being raised, those words were never even raised.

It was never suggested that this man as an incumbent had any commercial advantage and nor could it be.  He was a supervisor who checked invoices and checked some staff.  He is not in a position of Dr Sarfaty in that case, he is not in the position of Mr Martin, each of whom had a litany of qualifications.  This man has no qualifications.  Bearing in mind what I told you that half the staff had gone ‑ ‑ ‑

KIRBY J:   He has the qualification of having worked for 33 years.  Does that mean nothing now in this country?  I mean, we now have a country with lots of these contracts, so this is potentially a significant matter.  A lot of people now work under contracts.

MS STENMARK:   But that is the problem, your Honour, and the fact that there is a two‑year contract rather than a contract into the future which this man has entered into and there is a breach and we have paid for that breach, it cannot be sheeted home then to the respondent to say, “You have got a contract but we do not care about the contract because, well, it is a bit unfair and therefore” ‑ ‑ ‑

KIRBY J:   No, what it looks like, Ms Stenmark, is that the plaintiff was dismissed because of the allegations against him which the police did not go on with. 

MS STENMARK:   The charges were withdrawn.

KIRBY J:   That is what it looks like and that is no doubt what it feels like to him.

MS STENMARK:   Yes.  Your Honour, I cannot cavil with that, that is the fact, but this was a two‑year contract.  There was nothing in the contemplation of the parties at the time the contract was signed.  There was no commercial advantage.  There was no evidence of any commercial advantage.  There was no finding of a commercial advantage.  My friend cannot now run a different case and try and draw on Amann, Amann is a different case.

KIRBY J:   Can I ask you, you remember early in Mr Hurley’s argument I raised the question, “Did you run a case that” – “Well, it is true the police did not go on with their charges but we have still got our doubts and suspicions, we are not happy, and that is why we have a contract for two years and we finished with that”.  Is that how you ran the case?

MS STENMARK:   Your Honour, well, that is the evidence of Mr Warne, but the reason for the dismissal, the termination, was the fact that he and Mr Balsdon, the applicant, did not comply with lawful requests of the respondent in answering the letters and then coming to answer queries and ‑ ‑ ‑

KIRBY J:   This was whilst he was subject to police charges. Come in and answer them whilst he was under criminal prosecution.

MS STENMARK:   I am sorry.  Justice Bryson has found that that was unreasonable and that was why we had to pay the balance of the contract.  Your Honour, can I just raise something that your Honour raised with Mr Hurley, and I think this is what your Honour was thinking, although obviously your Honour will correct me.  After the charges were withdrawn would his expectation have returned?  But his expectation, if he did have any, could only be at best that he would be there till April 2003 and, because of what Mr Warne has said, obviously that was going to be the case.  But the whole point of having a simple, unambiguous contract is that parties know what they are entering into.

KIRBY J:   Yes, but the question that the Court has to ask is, put aside the criminal matters which you cannot rely on, as I understand it, what would in the probabilities have happened to this man if nothing of that kind had come up?  The argument that is put against you is that after 33 years of employment and at his age and with 14 promotions and no other reason apparent for removal that he would have gone on until he was 65, most workers do.  You do not get the pension until you are 65.

MS STENMARK:   It is not fair to say 30‑something years with the same employer because it is not.

KIRBY J:   No, well, it is the continuous – the predecessor.

MS STENMARK:   But, your Honour, that is important because in 1994 the company was privatised, so it would obviously be different matters that would weigh up as to whether this man was going to be employed rather, as you know, whether he worked with a government organisation.  As I said to you, half the managerial staff had gone as well, so you cannot take comfort from the fact that everyone who was there in 1994 was going to be there in 1996 or was going to be there the next year and the next two years and the next two years.  Mr Balsdon’s evidence does not substantiate the claim that he did expect, not could expect, he did expect to be there in 2011 because of the words that I read out to you.

KIRBY J:   Well, I may be wrong, but that is how I read page 1:

I was promoted 14 times.  There was ten times within the Government organisation and f times within the Murray Irrigation.

I was happy, they were happy with me, and so on, and along comes the criminal charges and ‑ ‑ ‑

MS STENMARK:   Even if, just even if your Honours find that he can have some sort of right or expectation or loss that is compensable, look at what happened in Martin.  Mr Martin for no other reason than it was – after the election in Tasmania there was a changing of the guard and a managerial report came in and it was found that they were going to destructure.  That is a management consultant word.  He did not have any cloud over him, he did not have any allegations of fraud or misconduct and it was submitted that he should be entitled to $30,000.  Justice Heerey said, “No, I think 20”.  So even if this man by some stretch is entitled to get some damages, what is he going to get?  $5,000 or ‑ ‑ ‑

KIRBY J:   Did you argue for a lesser sum?  I understood you put all your eggs in the basket of no sum.

MS STENMARK:   No, I am taking your Honour’s argument to the next thing, that even if he gets special leave and he wins the case ‑ ‑ ‑

KIRBY J:   You can put on a notice of contention that the Court of Appeal erred in failing to have regard to a discount for that sort of possibility, but that is not how this case has been run.  Good employee, 33 years, 14 promotions, criminal allegations, charges which do not get substantiated and then he goes at the next bell.

MS STENMARK:   I accept that, your Honour, but what Judge Ashford has given him is the fact that, notwithstanding any other contingency, he was going to work from 2003 until 2011, or 2012 was when he turned 65. The $319,000-odd that she awards him are figures based on the written submissions of Mr Hurley.  No evidence to back them up.  Just the figures were put up to her and she accepted them.  Now, it cannot be that this man ‑ ‑ ‑

KIRBY J:   Even on his case at the highest, it should have been discounted for this or that.  If you do not put that up, you cannot really complain to us that the trial judge did not deal with that issue.

MS STENMARK:   Well, we did put it up because, your Honour, we said in the trial that he should not be entitled to anything.

KIRBY J:   Exactly.

MS STENMARK:   Yes.

KIRBY J:   It was either black or white, it was not grey.

MS STENMARK:   Yes.

GLEESON CJ:   What finding did the primary judge make about the evidence in the last two questions and answers on page 12, that is, page 227 of the transcript.

MS STENMARK:   I cannot hear, your Honour.  I am sorry, on page 12?

GLEESON CJ:   Look at page 12 of the evidentiary material you have provided us with.  Do you see the last two questions and answers on that page?

MS STENMARK:   Yes.

GLEESON CJ:   How did the primary judge deal with that evidence?  Did she reject it or accept it or what?

MS STENMARK:   If your Honour goes to pages 18 and 19 I think it is, which are the pages that we were asked to give you some factual material about, if you look at the middle of the page 8 of the application book, line 23: 

Whilst the defendant said it would not have continued to employ the plaintiff as it took a certain view of the plaintiff’s conduct such a course is by no means certain.

So it is not even really a finding.  If you go to the next page it probably is, your Honour, against me.  She says, “I accept he would have chosen to remain in the employ”.  The fact that he might choose ‑ ‑ ‑

KIRBY J:   But she then goes on to say, “I am satisfied he was entitled to expect renewal”.

MS STENMARK:   But “he is entitled to expect”, he might choose.  There are two people in this equation.  It cannot just be the right of the applicant.

KIRBY J:   Yes, but it is a matter of calculating what damages are reasonable in the circumstances as a result of the breach.

MS STENMARK:   Your Honour, I notice that my time is nearly up so I will short track, but one of the other reasons put forward as the reason to be given special leave is that this Court should intervene because there seems

to be a difference of opinion between the Full Court and the Court of Appeal which needs resolution and we say that that is not the case because in Sarfaty clause 6 contemplated reappointment after the doctor turned 65, there was an eligibility for annual reemployment and there was no award of damages given for the loss of chance of that reemployment based on the decision and the Court there referred to what Chief Justice Mason and Dawson said in Amann.  The plaintiff failed because the defendant was not bound to provide the loss of benefits.  In Martin, the Full Court judgment is written by Justice Kiefel, and your Honours have that in the – but your Honours probably know it better than I anyway ‑ ‑ ‑

GLEESON CJ:   You had better get this out.  Do not draw breath, Ms Stenmark, your time is up.  Just finish what you want to say about Martin.

MS STENMARK:   Justice Kiefel refers to the decision of Amann and the decision of Justice Heerey and says in paragraph 37 of the judgment:

If it was shown to have been in their contemplation, the plaintiff would be entitled to the compensation.

That is the loss of the renewal of the contract of Mr Martin.  She goes on to say in the last paragraph it was a question of fact and that is what Justice Heerey found, that it was a question of fact because of a particular clause 3 in the contract, unlike this case.

GLEESON CJ:   Yes, thank you, Ms Stenmark.  Yes, Mr Hurley.

MR HURLEY:   Your Honour, a couple of brief points in reply.  In relation to the way the respondent conducts his business, it is also instructive to look at the way Mr Warne saw his contract, which is on page 9 of the material at question 30, where he was asked in question 25:

Q.   So your three‑year contract has rolled over each third year?
A.   Well it was two years and then three years, subject to review, yes.

Q.   But you would expect your contract to be renewed into the foreseeable future?
A.   Based on my performance I would, but that’s not an automatic thing.

So, we submit, her Honour was quite entitled to find on what he was saying there in the context of how everyone’s contracts in the company worked, that all of the employees on contracts were on the basis that they would be reappointed subject to performance.

KIRBY J:   Subject to the criticism that her Honour did not discount at all, but it does not seem as though that was argued.  In other words, it did not discount for the fact that a lot of staff had been made redundant or had retired.  There was not anything discounted for the change in the nature of the employment from public to private, the introduction of these individual contracts of employment.

MR HURLEY:   Your Honour, the only discounting she did was at the suggestion of the plaintiff which is set out in the calculations.  Your Honour, the criticism is made that in the Court of Appeal it was said that there was no evidence as to what was in the specific contemplation of the parties in this the fourth of a series of four contracts.  Your Honour, the second limb of Hadley v Baxendale, if I can just remind your Honours what Justice Brennan said in Amann 174 CLR 102 at point 10:

In evaluating a plaintiff’s benefits under a contract, the court does not look solely at the express terms of the contract but evaluates the plaintiff’s rights to benefits of any kind, whether those benefits are expressed by the terms of the contract or are ascertainable by reference to circumstances extrinsic to those terms.

As Chief Justice Mason and Dawson put it at page 92 point B of the same decision:

What was in the contemplation of the parties depends upon a consideration of the terms of the contract in the light of the matrix of circumstances in which it was made.

Those include 25 or 30 years service at the time the contract was made and the understanding, we say, established by the evidence that the contracts were renewable dependent on satisfactory performance.  Your Honours, we submit that the dispute between Sarfaty and Martin exists.  In Sarfaty the doctor there was required to resign and then apply for reappointment, not like the situation here where the contracts were renegotiated.  In Martin there was a specific provision regulating reappointment.  Your Honour, we submit this is a matter where special leave should be granted and, unless I can be of further assistance, those are the submissions on behalf of the applicant.

GLEESON CJ:   Thank you, Mr Hurley. 

A majority of the Court is of the view that special leave to appeal should be refused in this matter.  The draft notice of appeal asserts error by the Court of Appeal in denying an award of damages for the “loss” by the applicant of the “advantage” of seeking employment with the respondent after 6 April 2003 and that the primary judge correctly awarded damages of $318,677 for “loss of opportunity” to enter into contracts of employment between 2003 and 2012.

The questions of principle which the applicant seeks to agitate may well arise in an appropriate case where the necessary factual foundation has been laid in the evidence, but this is not such a case.  The result is that there are insufficient prospects of success to warrant a grant of special leave and the application should be dismissed with costs.

KIRBY J:   I would grant special leave.

AT 2.53 PM THE MATTER WAS CONCLUDED