Bampton v Viterra Limited - [2014] SADC 170

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
BAMPTON v VITERRA LIMITED
[2014] SADC 170
Judgment of His Honour Judge Slattery
10 October 2014
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH - REPUDIATION AND NON-PERFORMANCE - REPUDIATION
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH - REPUDIATION AND NON-PERFORMANCE - ELECTION AND RESCISSION - GENERALLY
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH - REPUDIATION AND NON-PERFORMANCE - REPUDIATION - WHAT AMOUNTS TO REPUDIATION
EMPLOYMENT LAW - TERMINATION AND BREACH OF CONTRACT - REDUNDANCY
EMPLOYMENT LAW - TERMINATION AND BREACH OF CONTRACT - REMEDIES - AGAINST EMPLOYER
EMPLOYMENT LAW - TERMINATION AND BREACH OF CONTRACT - TERMINATION BY OR AT INSTANCE OF EMPLOYEE
EMPLOYMENT LAW - THE CONTRACT OF SERVICE AND RIGHTS, DUTIES AND LIABILITIES AS BETWEEN EMPLOYER AND EMPLOYEE
The plaintiff was employed by the defendant as its Business Manager - Eyre Peninsula. In that role, the plaintiff was the manager of both the terminal operations of the defendant at Port Lincoln and at Thevenard and the defendant’s country operations. The plaintiff was the only manager at his level of authority in the South Australian operations of the defendant who had responsibility for both roles.
The immediate superior of the plaintiff within the defendant had management responsibility for both country operations and terminal operations of the defendant's business in South Australia.
The terms of the plaintiff's employment were recorded in a letter of retainer, one term of which was that the plaintiff was bound by the policies of the defendant concerning his employment and that the defendant was at liberty to amend those policies at its discretion. One of those policies was a redundancy policy, the terms of which relevantly read:-
"An Employee's position is redundant where the Company has made a definite decision that it no longer requires the job an Employee has been doing, be done by anyone (and this is not due to the ordinary and customary turnover of labour) and that decision leads to termination of the Employee's employment."
The plaintiff had been employed for a period of 33 years for the purposes of the redundancy policy.
Following difficulties encountered by the defendant in its grain terminal operations on Eyre Peninsula in April 2010, the defendant resolved to commence to formulate, consider and it thought appropriate, to implement a management plan that standardised its operational and business management arrangements across South Australia. By June 2010, the defendant resolved to split the responsibilities of the plaintiff’s immediate superior and for that person to be responsible only for the country operations of the defendant throughout South Australia. Another senior manager was to be appointed to the terminal operation of the defendant for the whole of South Australia.
In the period between the end of May and 22 July 2010, the plaintiff was informed of the possible plans of the defendant to split his role in half and leave him, possibly, with management only of the defendant’s country operations on Eyre Peninsula, the equivalent of half of the plaintiff’s then present role.
On 22 July 2010 the plaintiff was specifically informed of the plans of the defendant to split his role, that a job and person specification was to be sent to him and that there should be discussion on that topic on the following Monday 26 July 2010 at a defendants managers meeting in Adelaide which the plaintiff was due to attend. The hope expressed to the plaintiff was that the issue could be resolved during the week commencing Monday 26 July 2010.
On 23 July 2010 the defendant sent to the plaintiff a draft job and person specification for the role of Country Manager Eyre Peninsula. On the evening of Sunday 25 July 2010, the plaintiff sent an email to the defendant and informed the defendant that he treated the conduct of the defendant as repudiatory, that the defendant had renunciated his contract of employment and that the plaintiff accepted the defendant’s repudiation of the contract of employment. The plaintiff claimed that under the redundancy policy he was thereby made redundant and that he was entitled to a redundancy payment calculated in accordance with his 33 years of service.
The defendant rejected the claims of the plaintiff and on 27 July 2010 purported to amend the terms of the redundancy policy in the exercise of its discretion.
Whether the conduct of the defendant was sufficient to amount to a repudiation of the contract of employment; whether the plaintiff was entitled to be treated as having made redundant and to receive a redundancy payment under the redundancy policy; whether the defendant had engaged in actionable misleading conduct in the manner with which it dealt with the plaintiff; whether if a plaintiff was entitled to a redundancy payment, such contractual term was properly to be treated as a penalty.
Held:-
1. The conduct of the defendant was repudiatory and by its acceptance by the plaintiff, the contract of employment was lawfully brought to an end;
2.Under the specific terms of the redundancy policy the plaintiff was not made redundant by the action of the defendant or by any plan of the defendant to cleave his role as Business Manager - Eyre Peninsula;
3. Observations about the application of the penalty doctrine in contract and in equity;
4. Observation about whetherthe terms of the contract of employment the defendant was in a position to amend the redundancy policy and if so on what basis;
5. Observations about whether the remedies available under the Trade Practices Act 1975 (Cth) were available to the plaintiff arising out of the conduct of the defendant;
6. Observations about whether the plaintiff was entitled to any remedy under the Fair Work Act 2009 (Cth) or any other remedy under common law or under statute.
Fair Work Act 2009 (Cth) ss 119, 44, 545, 61(3), part 2-2, 117; Industrial Relations Act 1988 (Cth) ss 170EA, 377; Income Tax Assessment Act 1936 (Cth) ss 27A(1), 27F; Superannuation Legislation Amendment (Simplification) Act 2007 (Cth) sch 1 item 3; Australian Securities Investment Commission Act 2001 (Cth); Fair Trading Act 1999 (VIC); Trade Practices Act 1975 ss 52, 53B, referred to.
Commonwealth Bank of Australia v Barker [2014] HCA 32; Easling v Mahoney Insurance Brokers Pty Ltd (2001) 78 SASR 489; Whittaker v Unisys Australia Pty Ltd (2010) 26 VR 668; Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115; Earney v Australian Property Investment Strategic Pty Ltd [2010] VSC 621; O’Meara v Stanley Works Pty Ltd [2006] AIRC 496; Mohazab v Dick Smith Electronics Pty Ltd (No 2) (1995) 62 IR 200; Rheinberger v Huxley Marketing Pty Ltd (1996) 67 IR 154; Mosey v Australian Customs Service (2002) 116 IR 1; Western v Union des Assurances de Paris (1996) 88 IR 259; Amcor Ltd v Construction, Forestry, Mining and Energy Union (2005) 222 CLR 241; R v The Industrial Commission of South Australia; ex parte Adelaide Milk Supply Co-operative (1977) 16 SASR 6 ; Hawkins v Commonwealth Bank of Australia (No 2 (1996) 70 IR 213; Foster’s Group Ltd v Wing (2005) 148 IR 224; Jones v Department of Energy and Minerals (1995) 60 IR 304; Dibb v Commissioner of Taxation (2004) 136 FCR 388; Encyclopaedia Britannica Australia Ltd v David Campbell [2009] NSWCA 286; Hodgson v Amcor Ltd [2006] VSC 151; Ringrow Pty Ltd v BP Australia Pty Ltd (2005) 224 CLR 656; Andrews v Australia and New Zealand Banking Group Ltd (2012) 247 CLR 205; Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79; AMEV-UDC Finance Ltd v Austin (1986) 162 CLR 170; Esanda Finance Corporation Ltd v Plessnig (1989) 166 CLR 131; Interstar Wholesale Finance Pty Ltd v Integral Home Loans Pty Ltd (2008) 257 ALR 292; Riordan v War Office [1959] 1 WLR 1046, 1054; Birrell v Australian National Airlines Commission (1984) 5 FCR 447; New South Wales v Paige (2002) 60 NSWLR 371 ; BP Refinery (Westernport) Pty Ltd v Hastings Shire Council (1977) 52 ALJR 20; Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337; Ansett Transport Industries (Operations) Pty Ltd v Commonwealth (1977) 139 CLR 54; Renard Constructions (ME) Pty Ltd v Minister for Public Work (1992) 26 NSWLR 234; Meehan v Jones (1982) 149 CLR 571; Thorby v Goldberg (1965) 112 CLR 597; Byrne v Australia Airlines Ltd (1985) 185 CLR 10; Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594; Martin v Tasmania Development and Resources (1999) 163 ALR 79; Mulcahy v Hydro-Electric Commission (1998) 85 FCR 170; Hodgson v Amcor Ltd [2006] VSC 151, applied.
Quinn v Jack Chia (Australia) Ltd [1992] 1 VR 567; Federated Mutual Insurance Co of Australia Ltd v Sabine [1920] SALR 284; Shevill v Builders Licensing Board (1982) 149 CLR 620; Gamboni v Bendigo and Adelaide Bank Ltd [2013] VSCA 92; Commonwealth Bank of Australia v Finance Sector Union of Australia (2002) 125 FCR 9; Hawkins v The Commonwealth Bank of Australia (1996) 66 IR 322; United Rubber (Aust) Ptd Ltd v National Union of Storeworkers, Packers Rubber & Allied Workers (1989) 31 AILR 389; Forest Products, Furnishing and Allied Industries IUW (WA) v Dancroft Holdings Pty Ltd (1994) 36 AILR 348; Short v F W Hercus Pty Ltd (1993) 40 FCR 511; Quality Bakers of Australia Ltd v Goulding (1995) 60 IR 327; Campbell v Encyclopaedia Britannica Australia Ltd [2008] NSWSC 1178; Jones v Dunkel (1959) 101 CLR 298; Zafiriou v Saint-Gobain Administration Pty Ltd [2007] VSC 456; Yarra Capital Group Pty Ltd v Sklash Pty Ltd [2006] VSCA 109; State of Tasmania v Leighton Contractors Pty Ltd [2005] TASSC 133; Frederick v State of South Australia [2006] SASC 165 ; Akmeemana v Murray [2009] NSWSC 979 ; Riverwood International Australia Pty Ltd v McCormick (2000) 177 ALR 193 ; Butt v M’Donald (1896) 7 QLJ 68; Progress & Properties (Strathfield) Pty Ltd v Crumblin (1984) 3 BPR 9496; Goldman Sachs JBWere Services Pty Ltd v Nikolich [2007] FCAFC 120; Health Administration Corporation v Crocker (2004) 138 IR 147; Foster v Rinker Australia Pty Ltd (2007) 169 IR 10; Zafiriou v Saint-Gobain Administration Pty Ltd [2007] VSC 456, considered.

BAMPTON v VITERRA LIMITED
[2014] SADC 170
Introduction and summary of decision

In this action Mr Bampton (‘the plaintiff’) was employed by Viterra Limited (‘the defendant’) as its Business Manager – Eyre Peninsula between 2009 and 2010. The terms and conditions of their contract of employment were to be found in a letter of retainer dated 15 September 2004 made between the plaintiff and the defendant. The plaintiff had worked in various roles for the predecessors of the defendant for about 27 years. Service by the plaintiff with those predecessor entities was counted as service with Ausbulk Ltd, the employer party to the 2004 letter[1] as well as, from 2009, in his service with the defendant.
[1] Exhibit P1, p 1.
The terms of the plaintiff’s contract of employment with the defendant under the 2004 letter included, under the conditions of employment, that the plaintiff’s employment was at Port Lincoln but that there may be a future need to transfer his employment to another location to broaden his experience or to suit organisational needs. His duties were outlined in a job and person profile. He was bound by policies and procedures of the organisation as amended from time to time and copies of all policies and procedures were available on the intranet. One such policy was the redundancy policy.[2] That policy relevantly defined a redundancy as:-
[a]n Employee’s position is redundant where the Company (the defendant) has made a definite decision that it no longer requires the job an Employee has been doing be done by anybody... and that decision leads to termination of the employee’s employment.[3]
[2] Exhibit P1, p 23.
[3] Exhibit P1, p 23.
As at 2010, the total remuneration package of the plaintiff with the defendant (in AU$) was as follows:-
PAYG Cash Salary   120,041
Minimum Employer Superannuation Component  10,956
Salary Sacrifice – Super – Additional Cont. Component  1,690
Motor Vehicle Component   6,909
Total Fixed Remuneration Package (per annum)  139,596
As Business Manager – Eyre Peninsula, the plaintiff was responsible to manage the defendant’s terminal and country operations on the Eyre Peninsula including staff, operations, management of assets, performance of assets and reporting to head office through his immediate superior, Mr Andrew Hannon.
In the defendant’s hierarchical structure, Mr Hannon’s superior from 2009 became Mr Don Drombolis. Mr Drombolis, a Canadian national, became the Senior Executive in the South Australian office from 2009. At the instigation of Mr Drombolis, from early 2010, planning commenced to regularise the positions of on-site management staff in the South Australian operations of the defendant. Similar to the Canadian model, the restructure plan included the requirement to formalise the split between country and terminal operations in all of the defendant’s business centres in South Australia.
At that time, the plaintiff was the only executive at his level of authority who was responsible for the terminal and country operations. Terminal operations were focused on receipt of product at the ports (Port Lincoln and Thevenard (grain at Port Lincoln and grain, gypsum, salt and mineral sands at Thevenard)) and dispatched from port. Country operations were focused upon the receipt, grading, handling and storage of grain and then dispatch of that grain to port. Each task was time and labour intensive but at different levels and often at different times of the year.
Real difficulties arose in the dispatch from Port Lincoln of grain in April 2010. Despite the plaintiff’s contention to the contrary, I am satisfied that there were serious difficulties encountered that required the attention of the plaintiff and a number of visits from Adelaide of the plaintiff’s superiors including Mr Hannon. I am also satisfied that the situation caused real difficulties for the defendant and that the plaintiff, as the Senior Executive on the ground, bore responsibility for those difficulties.
Soon afterwards, a final decision was made by Mr Drombolis to commence the review of the Eyre Peninsula operations with the view to separating the role performed by the plaintiff into two roles: Terminal Manager and Country Manager. That process of assessment commenced no later than early May 2010 and by late May 2010 had progressed to a quite firm proposal. At that time, Mr Hill, another executive of the defendant, informed the plaintiff during a visit to Port Lincoln of the plan of the defendant to separate the roles performed by the plaintiff.
That conversation became the catalyst for the plaintiff commencing to make enquiries of the defendant about his future. From that time, there was no uniformity of the plaintiff’s approach to the defendant or of the defendant’s responses to the plaintiff. Even though the plaintiff was informed in June 2010 that no final decision had been made by the defendant about its plans for the Eyre Peninsula, by 22 July 2010 that situation had completely changed.
On 22 July 2010, Mr Hannon visited the plaintiff in Port Lincoln and he informed the plaintiff of the defendant’s plan to split the plaintiff’s role. There was no discussion of the timing of the implementation of this plan but Mr Hannon arranged to send a job description to the plaintiff on 23 July 2010 and there was proposed to be a discussion of the contents of that job description at a managers’ meeting in Adelaide on 26 July 2010. The plaintiff was told in that discussion that the likelihood at that stage was that he would be offered the role of Country Manager at the same level of salary and emoluments of employment except that he would be required to travel to Cummins from Port Lincoln (50 kilometres) to work each day. The job description (for the Country Manager role) was sent to the plaintiff on 23 July 2010.
On 25 July 2010 the plaintiff sent an email to the defendant contending that the defendant had engaged in repudiatory conduct which, if accepted (and the plaintiff did accept) entitled the plaintiff to terminate the contract of employment. The plaintiff also claimed that his position was redundant and that he was entitled to a redundancy payment based upon his 33 years of service.
For the reasons which follow, I find that the plaintiff was, as at 25 July 2010, entitled to treat the conduct of the defendant as sufficiently repudiatory to entitle him to treat the contract of employment as terminated. After that time, there was no mutual agreement between the parties that the plaintiff could withdraw the notice of termination. The parties’ contractual relationships ended on that day.
Also for the reasons which follow, I find that under the wording of the redundancy policy of the defendant in the particular circumstances of the plaintiff’s employment with the defendant (and it was conceded by the defendant that the redundancy policy formed a part of the contract of service of the plaintiff with it) there was no redundancy of the plaintiff. The redundancy policy generally reflected the common law test of redundancy (position) that is narrower than an employee redundancy. The cleaving of the plaintiff’s former job left the plaintiff with sufficient duties to perform that were directly associated with the former job of the plaintiff that it could not be said that a redundancy arose.
Under the contract of employment, the plaintiff is entitled to receive a payment of the equivalent of four weeks’ salary as notice.
The pleadings
The plaintiff, Mr Ian Bampton, was born on 3 June 1959 and between 1977 and 27 September 2004 he was employed by a company called Ausbulk Ltd (‘Ausbulk’). That company was formerly known as the South Australia Cooperative Bulk Handling Ltd. Between 5 April 2004 and 27 September 2004, the plaintiff was employed by Ausbulk as its Business Manager – Eyre Peninsula. The terms of the employment were set out in a letter from Ausbulk to the plaintiff dated 15 June 2004.
On or about 27 September 2004, Ausbulk merged with a company called ABB Grain Ltd (‘ABB’). Following that merger, the plaintiff continued to be employed as Business Manager – Eyre Peninsula on the same terms and conditions as he was employed by Ausbulk, namely the letter of 15 June 2004. It will be necessary later to refer directly to the terms and content of this letter.
In 2009, the defendant (Viterra Limited), a Canadian company, purchased the ABB business and thereafter the plaintiff was employed by the defendant on the same terms and conditions.
As at 4 May 2010, the plaintiff received a total remuneration package under the employment contract in an amount of $139,596.00 which is made up as PAYG cash salary, minimum employer’s superannuation contributions, salary sacrifice additional contribution component for superannuation and a motor vehicle component.
The plaintiff had managerial responsibility for the operations of the defendant’s terminal operations business for terminals at Port Lincoln and Thevenard including for grain and non-grain products. The plaintiff alleged in his pleadings that he had responsibility for Port Giles on the Yorke Peninsula but there was no evidence to support this assertion of fact and it was not pursued at trial. The plaintiff also had managerial responsibility for the operations of the defendant’s country operations on Eyre Peninsula. The evidence discloses that in the South Australian operations the plaintiff was unique in his responsibility for both country and terminal operations.

Mr Andrew Hannon was at that time the plaintiff’s immediate superior. Mr Hannon was employed as the Operations Manager – Storage and Handling of the defendant. His duties included responsibility for the terminal operations and country operations. He was also responsible for supervising the defendant’s business managers of both terminal operations and country operations.
The plaintiff alleges that on 22 July 2010, he was orally informed by Mr Hannon that the defendant had decided to restructure its business, that it had decided to abolish and had abolished the plaintiff’s job and to split the plaintiff’s duties between two newly created jobs namely Manager – Terminal Operations and Manager – Country Operations. The defendant specifically denies these allegations on two principal bases. The first is that the defendant had not taken the decision to abolish the job of the plaintiff as it existed prior to 22 July 2010. It also alleges that no final decision had been made about abolishing the plaintiff’s position and if this was to occur, it would occur at some indeterminate time in the future.
The plaintiff alleges that on 22 July 2010, the defendant offered the plaintiff the new Eyre Peninsula country operations job and that it would forward to him a draft job description. Acceptance by the plaintiff of that job would require him to relocate from Port Lincoln to Cummins for work only. It was not suggested that the plaintiff would have to stop residing in Port Lincoln but would be required to drive to Cummins (a distance of about 50 km) each day.
At a date prior to that time, the job previously conducted by Mr Hannon was to be cleaved into two new jobs. Mr Hannon’s duty in respect of terminal operations would become the responsibility of a newly created position called ‘Operations Manager – Terminal Operations’. The person to take over that job was a Mr Michael Hill. This was a promotion for Mr Hill to the same level of management as Mr Hannon. Mr Hannon’s role would become ‘Operations Manager – Country Operations’ and the direct reporting line to Mr Hannon would be proposed to be from the plaintiff.
The plaintiff alleges that all of those changes were to be announced at the next meeting of the defendant’s business managers scheduled to occur in the following week. The defendant denies this assertion and pleads that some meetings were scheduled such as business managers’ meetings and that the correct position was that Mr Hannon needed the plaintiff’s response by the Monday of that week, that is Monday 26 July 2010, so that something could be announced by the defendant to the meetings of managers. The defendant admits that it was a wish for Mr Hannon to have the matters finalised by the following week but that that was not an imperative given to the plaintiff.
On 23 July 2010, Mr Hannon sent to the plaintiff a job description for the new Eyre Peninsula country operations job in draft. The plaintiff alleges that this was the final version of this document whereas the defendant asserts that it was merely a draft, it was not final and that there was a hope in the defendant for there to be further negotiations in relation to the content of the draft.
Leaving aside the question of whether it was a final document or a draft, the new EP country operations job did involve less duties and responsibilities than the plaintiff’s current job because it removed terminal operations, there was less reporting staff, there was less supervision of staff, less revenue involved, less volume of storage and handling of grain, a lower level of assets and there was no responsibility for work expenditures in relation to terminals or key persons at terminals. There is no dispute on the defendant’s part that the plan was to split the roles previously undertaken by the plaintiff and the role to be fulfilled by the plaintiff in country operations had less responsibilities than had previously been undertaken by him because he was formerly responsible for country operations as well as for terminals. The question of the status of the plaintiff if he accepted the country operations job and the conduct of the defendant in informing the plaintiff of its plan to split his previous job on Eyre Peninsula into country operations and terminal operations (he having been previously responsible for both) are a central part of the dispute in these proceedings.
The plaintiff alleges that by the conduct of Mr Hannon and by the promotion of the change in the position of the plaintiff as above described, was conduct by the defendant which repudiated the employment contract. The plaintiff asserts that this conduct abolished his job. This in turn disclosed an intention by the defendant to no longer be bound by the employment contract and by abolishing the plaintiff’s previous job of responsibility for the whole of Eyre Peninsula, the defendant fundamentally altered the terms and conditions of the plaintiff’s employment.
The plaintiff’s contention is that the defendant was announcing to the plaintiff a finalised position and that there was no room for any further discussions between the plaintiff and the defendant concerning the plaintiff’s future. Thus it is asserted that there has been abolition of the plaintiff’s former job, there was a termination of the employment contract and there was a fundamental altering of the terms and conditions of the plaintiff’s employment.
This attitude of the plaintiff was reflected in an email dated 25 July 2010 sent by the plaintiff to Mr Hannon in which the plaintiff asserted that having regard to the decision of the defendant to abolish the plaintiff’s job, the change in status of the plaintiff under the new country operations job and the fact that the plaintiff’s job was thereby allegedly redundant meant that the plaintiff could claim a redundancy payment. The plaintiff alleges that by sending this email, there was an acceptance of the defendant’s repudiation of the employment contract.
Thus, on the pleadings, the matters for my decision include whether the actions of the defendant were repudiatory; whether the actions of the plaintiff were a renunciation of his contract with the defendant; whether the actions of the plaintiff terminated the contract of employment with the defendant; and whether the plaintiff’s position with the defendant was abolished on 22 July 2010, the date of the visit to Eyre Peninsula by Mr Hannon.
There were further dealings between the plaintiff and the defendant. There was a meeting on 26 July 2010. The plaintiff asserts that at that meeting the defendant informed the plaintiff that his job had been abolished, that he was not entitled to a redundancy payment and that his options were to accept the new Eyre Peninsula country operations job or to resign.
There is some difference between the plaintiff and the defendant as to what occurred at this meeting. The defendant’s pleaded version was that Mr Hannon said to the plaintiff that there was a decision to abolish his role at some time in the future (called an indeterminate time but little assistance is gained from this adjective). The plaintiff was told that his job had not yet been abolished and that he was not entitled to a redundancy payment now or in the future. He was also told that if he did not accept the new position, he could continue in the same position until the restructure. However the position was that the defendant was now intending to carry out the restructure. A question arises as to whether, implicitly or actually, that restructure was to happen sooner than later. Alternatively, the plaintiff claims that by its conduct, the defendant abolished the plaintiff’s job, evinced an intention to no longer be bound by the employment contract and by its actions, fundamentally altered the terms and conditions of the employment. The question is to identify the conduct: the plaintiff contends that his job was abolished on 22 July 2010, whereas the defendant maintains that it was only opening the discussions with the plaintiff about his future.
The plaintiff contends that his job was redundant within the meaning of the redundancy policy of the defendant with the plaintiff and that he was entitled to a redundancy payment of $243,461.92 being an amount for a notice period of five weeks plus three weeks for every 33 years of service. The defendant denies this entitlement. The calculation of this amount is not in dispute between the parties nor that the redundancy amount has not been paid. The plaintiff pleads in the alternative that there is an estoppel arising against the defendant in denying that it had made a definite decision that it no longer required the plaintiff’s job to be done by anybody because of the representations made by the defendant to the plaintiff that it had abolished the plaintiff’s job and made a definite decision that it no longer required the plaintiff’s job to be done by anybody upon which the plaintiff relied to his detriment. If that was not the case in the sense that if the defendant had not made a decision, the plaintiff alleges that there was further misleading conduct by virtue of the fact that in representing to the defendant, that the decision had been made, and upon which the defendant relied, there was misleading conduct on the part of the defendant.
A further alternative plea is made by the plaintiff that if the defendant conducted itself in the manner in which it did but not having made a definite decision that it no longer required the plaintiff’s job to be done by anybody, then the defendant was conducting itself in a manner likely to damage or destroy the relationship of trust and confidence between itself as the plaintiff’s employer and the plaintiff as the defendant’s employee. This was in breach of the implied term of trust and confidence. The question of the existence, extent and operation of such an implied term has now been adversely decided by the High Court in Commonwealth Bank of Australia v Barker (‘Barker’).[4] I need not consider that matter any further. The plaintiff alleges that he has suffered loss and damage or in the alternative that he is entitled to a redundancy payment pursuant to s 119 of the Fair Work Act 2009 (Cth) (‘FWA’) namely for 12 weeks pay and for other relief.
[4] [2014] HCA 32.
The plaintiff filed a detailed reply to the defence of the defendant. The defendant was given leave to file a rejoinder to the reply. In the reply, the plaintiff contends that on or about 17 May 2010, the plaintiff had a telephone conversation with Mr Hannon and said that if the defendant was going to abolish his job and could not offer him another suitable equivalent job, the plaintiff wished to discuss redundancy and come to a satisfactory mutual arrangement to end his employment. The plaintiff pleads that Mr Hannon said that the defendant had not yet made any decision and that it still required him to perform the plaintiff’s job. The plaintiff also pleads that between 24 and 28 May 2010 Mr Michael Hill visited Port Lincoln and informed the plaintiff orally that the defendant intended to abolish the plaintiff’s job and split his duties between two new jobs. This was followed up by an email of 28 May 2010 from the plaintiff to Mr Hannon in which the plaintiff said that he understood that the defendant intended to abolish the plaintiff’s job and split the duties between two new jobs. It is alleged that the plaintiff said in that email that he was not prepared to take a diminished role and asked what the options were. The response from Mr Hannon on 31 May 2010 was that the defendant was reviewing all options across the Eyre Peninsula but that at that stage there was no change to the existing organisational structure of the Eyre Peninsula. This latter position is as the defendant contends the position to be.
The plaintiff asserts that despite the draft job description being described as a draft, it was sent to him as the job description for the new job and consistent with that, the plaintiff alleges that on 22 July 2010 the plaintiff was told by Mr Hannon of the defendant that the defendant needed to know by the following Tuesday whether the plaintiff would accept the new EP country operations job. If there were concerns, the plaintiff could contact Mr Hannon over the weekend. Mr Michael Hill had accepted the new Operations Manager – Terminal Operations job and those matters should be kept confidential. In the rejoinder, the defendant pleads a denial of any requirement on the plaintiff to make a decision regarding whether to accept the new EP country operations job by the following Tuesday. The defendant positively pleads that on 22 July 2010, Mr Hannon told the plaintiff words to the effect that it would be convenient if the plaintiff could speak to him about the draft job description by the following Tuesday but if he had any concerns or if there are any matters he would like to discuss, he could speak with Mr Hannon at any time including over the weekend.
The plaintiff also denied that Mr Ben Norman, the Human Resources Manager of the defendant, or Mr Hannon of the defendant informed him at the meeting on 26 July 2010 or on 27 July 2010 that the plaintiff was entitled to continue in the current job until the restructure took effect. The plaintiff positively pleads that Mr Norman and Mr Hannon told him that his only options were to accept the new operations job or to resign.
On 27 July 2010, the defendant amended its redundancy policy. The plaintiff alleges in his reply that this amendment would not have been effective to deprive the plaintiff of the benefit of the redundancy policy as it stood on 26 July 2010 because the defendant had no right to amend the redundancy policy or alternatively if there was such a right, then there was an implied term of the contract that such right would not be exercised capriciously, unreasonably or unfairly to the plaintiff. These allegations are denied by the defendant in its rejoinder. The defendant also denies any implied term within the contract, any estoppel or any other basis which would prevent the defendant from, at any time in its absolute and unfettered discretion, amending its redundancy policy.
The evidence
In the proceedings, evidence was called from only two witnesses, the plaintiff and Mr Hannon. Exhibit P1 contained the agreed documentary record of the dealings between the parties. There were five other exhibits tendered by the parties to which reference needs to be made.
In my opinion, in reaching a decision in this matter it is necessary to view the evidence in light of the documentary material between the parties. Because of the differences in some of the recollections of events in this matter, I have placed extra reliance upon the objectively available documentary records and the objectively ascertainable version of events as it is disclosed in the documentary records.
Before addressing the evidence, it is necessary to give some description of the corporate structure of the defendant because this will assist in understanding the issues arising between the parties.
As already identified, the defendant acquired ABB and its grain storage and handling business some time in September 2009. The defendant is a Canadian company. The defendant has now been acquired by another large multinational corporation.
After the acquisition in 2009, Mr Don Drombolis was appointed to the role of ‘General Manager, Operations’ in South Australia. Mr Drombolis was a Canadian national who had been appointed to oversee the operations, at least in South Australia.
Below Mr Drombolis, in the corporate structure, there were a number of managers. Mr Andrew Hannon was the ‘Operations Manager – Storage and Handling’. This position entailed responsibility for both storage in silos or temporary storage. It also included responsibility for the handling of that grain through ports, such as at Port Lincoln and/or Thevenard for Eyre Peninsula but more latterly at Port Lincoln, although heavy mineral sands, gypsum and salt were also loaded from the Thevenard port.
In 2009, Mr Michael Hill was the Manager of strategy and planning. In early July 2010, Mr Michael Hill became Manager of the handling operations at Thevenard and at Port Lincoln. This was a part of the job Mr Hannon had fulfilled until then under the dual responsibilities of his role. Implicit in this is the fact that Mr Hill received a promotion. Also implicit is the fact that at that time, Mr Hannon commenced to work in a position with less responsibility. His position had been effectively cleaved.
The importance for this case is that these changes were made to match the model of operation of the company conducted in Canada. In that country, under the defendant’s operations, grain handling at country sites and grain handling out of port terminals was operated by separate management personnel.
Soon after the acquisition and takeover by the defendant in September 2009, Mr Drombolis commenced discussions amongst the senior executives as the ‘General Manager – Grain Operations’ concerning the differences between the way in which the Australian business and the Canadian model differed.[5] It is in the background of those changes that the events, the subject of this action, occurred.
[5] Transcript of Proceedings, Bampton v Viterra Limited (District Court of South Australia, DCCIV No. 1872 of 2010, Judge Slattery, 17 June 2013 - 24 June 2013 ) 324, 329, 363 (hereafter ‘T’).
On 15 June 2004, the plaintiff was employed in the full time position of Business Manager – Eyre Peninsula with Ausbulk.[6] He was employed under the terms of a general letter of retainer of that date. The various conditions of employment are set out in page 2 of the letter[7] and under paragraph [5], the following is set out:-
[6] Exhibit P1, pp 1-10.
[7] Ibid.
5. Conditions of Employment
...
This appointment is at Port Lincoln. However there may be a future need to transfer you to another location to broaden your experience and/or to suit the organisational needs. In that case, while we will be willing to consult with you, we reserve the right to require you to move.
...
The duties of the position are set out in paragraph [6] of the letter that reads as follows:-
6. Duties
These are outlined in the Job and Person profile and were discussed with you. You will also be required to carry out such other duties as may be directed from time to time.
The letter also contains a separate provision in relation to the policies and procedures of the company. It is set out in paragraph [15]. It reads as follows:-
15. Policies and Procedures
You will be bound as an employee of the Company, to abide by the policies and procedures of this organisation as amended from time to time.
Copies of all policies and procedures are available on the intranet...
Termination is covered in paragraph [20] the relevant portions of which read as follows:-
20. Termination
20.1This Agreement may be terminated by either party on giving one month’s notice in writing to the other party. Notwithstanding the aforementioned, this Agreement may be terminated by us summarily at any time ...
Transmission of business is covered in paragraph [21] of the letter and reads as follows:-
21. Transmission of Business
In the event of a transmission of Business, you will not be entitled to any redundancy or severance payment if the Company offers suitable alternative employment. This clause will take precedent over any Company Redundancy Policy or Appendix.
The plaintiff was informed of ongoing merger discussions between ABB and Ausbulk by letter of 20 September 2004.[8] The letter confirms that following the merger, the employment of the plaintiff with Ausbulk would continue. The merger occurred and in accordance with the usual practice, there were annual remuneration reviews for the plaintiff from time to time.[9] In 2007 the plaintiff received a job and person profile from ABB.[10] In the job profile, the primary focus for the plaintiff as Business Manager – Eyre Peninsula was to manage the business centre to meet or exceed the expected outcomes in the key result areas and to identify and develop business opportunities so that: ‘...we grow and maintain ABB’s position as the leading Australian agribusiness...’.[11]
[8] Exhibit P1, p 7.
[9] Exhibit P1, p 8.
[10] Exhibit P1, pp 9-10.
[11] Exhibit P1, pp 9-10.

From time to time, ABB produced charts of the hierarchical structure in which the plaintiff operated. They were generally described as: ‘group operations – storage and handling Western Eyre Peninsula – Thevenard’ and ‘group operations division – storage and handling team Eyre Peninsula – Eastern Eyre Peninsula’.[12] These charts show the various responsibilities of the plaintiff and the reporting line to the plaintiff. These reporting lines cover both country grain and discharge of grain from various ports. The plaintiff had responsibility for both ports and country operations throughout the whole of the Eyre Peninsula.[13]
[12] Exhibit P1, pp 12-14.
[13] T 96, 322.
The evidence discloses that the position that the plaintiff fulfilled on Eyre Peninsula was unique in the South Australian operations. That was the position both in respect of ABB and in respect of the defendant. In the usual course, a manager would be responsible for terminal sites or country sites. This was the position for the rest of South Australia and the plaintiff was the only person in South Australia who was in this position of having responsibility for both terminals and country sites. The other sites within South Australia were managed in accordance with what may be understood to be the typical management structure for the defendant.[14] There was some suggestion in the evidence that that was not necessarily so because of some silo storage arrangements at Bute were managed by a terminal manager. I am not satisfied on the evidence that, whatever arrangements are made in relation to the Bute silos, such arrangements carry the relevant manager outside of the usual structure. In any event, the question of the status of the Bute arrangements was not seriously pursued in evidence and I will leave it to one side.
[14] T 96, 187-196.
Following the acquisition by the defendant of the business of ABB and the shareholding of ABB, the defendant introduced its own version of a redundancy policy. The form of the redundancy policy is disclosed in exhibit P1 at pages 23-24. There is no evidence of any previous redundancy policy but it may reasonably be presumed to have existed. The policies and procedures of the employment contract which governed the employment of the plaintiff, in clause 15, entitled the plaintiff’s employer to amend policies and procedures from time to time. The plaintiff is bound by his contract of retainer, as an employee, to abide by the policies including as they are amended from time to time. The redundancy policy is one such policy. It was not seriously put in contest by either of the parties that the policies of the defendant bound the employer and employee relationship and that (at least from the plaintiff’s viewpoint) there was an applicable redundancy policy. This document[15] discloses that the policy has application to permanent Australian and New Zealand employees of the defendant and is to apply except to the extent that any employee’s award, enterprise agreement or other stated condition of employment for redundancy is inconsistent with the policy. There was no evidence that this policy was so inconsistent. Based upon the position taken by the parties about the redundancy policy forming part of and therefore becoming a term of the plaintiff’s contract of employment it has not been necessary for me to consider that matter further. In a number of cases, the courts have been required to identify whether and in what circumstances such policies are found to form a term of the contract of employment. It is no easy task to draw a statement of principles from those authorities that appear to largely turn on their peculiar facts. Even less simple is the establishment of guiding principles about such policies where, as here, those policies may be varied from time to time. I discuss those issues later in these reasons. For present purposes I will treat the policy as forming a term of the contract of employment.
[15] Exhibit P1, pp 23-24.
The definition of redundancy within the policy reads as follows:-
Definition of Redundancy
An Employee’s position is redundant where the Company has made a definite decision that it no longer requires the job an Employee has been doing to be done by anyone (and this is not due to the ordinary and customary turnover of labour) and that decision leads to termination of the Employee’s employment.[16]
[16] Exhibit P1, p 23.
As will later become apparent, the question of alternative employment may be a relevant matter for consideration. In the policy in existence as at 26 July 2010, the aspect of alternative employment was only included in the ‘Transmission of Business’ provision which read as follows:-
Transmission of Business
In the event of a Transfer of Business, an Employee will not be entitled to any redundancy or severance payment, if the Employee receives an offer of alternative employment comprising of continuity of service and comparable salary and status.[17]
[17] Exhibit P1, p 24.
There appears to be little dispute between the parties that this definition of redundancy relates to what is commonly described as position redundancy. This is apparent by reference to the employee’s position (called a ‘job’) becoming redundant following a decision that an employer no longer requires the job an employee has been doing be done by anyone. Those are the first two steps of the definition and the third step is that the decision leads to termination of the employee’s employment. One question for clarification is by whose decision the employee’s employment is terminated (the employer or the employee), although in the end there was little dispute that the termination of the employment would be an act of the defendant. There is no contest between the parties that this definition of redundancy within the redundancy policy was applicable as at 22, 23, 24 and 25 July 2010. There is a difference between the parties arising from the amendment by the defendant of the policy on 27 July 2010.
Under the redundancy policy, employees made redundant are entitled to a redundancy payment. That entitlement reads as follows:-
Redundancy Payments
A Permanent Employee with more than twelve months continuous service will receive at the time of his or her redundancy, termination payments calculated in accordance with the following:
Notice Period and Payment
·      Four (4) weeks ordinary pay in lieu of notice (if applicable).
·      The amount of notice will be increased by one (1) week if the employee is over forty-five (45) years old and has completed two (2) continuous years of service.
·      An employee may be required to work through all (or part only) of the notice period or the Company may make payment in lieu of the whole notice period (or the un-worked balance of the notice period).
Redundancy Payment
For the purpose of redundancy, the calculation is as follows;
·      Employees that have completed one year of continuous service but less than two (2) years will be entitled to four (4) weeks ordinary pay.
·      Employees that have completed two (2) or more years of continuous service will be entitled to three (3) weeks per completed year.
The maximum payment is capped at 104 weeks in total, inclusive of notice and severance payments.[18]
[18] Exhibit P1, pp 23-24.
In February and March 2010, the defendant undertook a salary review in relation to the plaintiff. By letter of 4 March 2010,[19] the defendant informed the plaintiff that an annual salary review had occurred which took into account the Australasian labour market salary movements and an employee’s performance over the previous 12 months. The plaintiff was awarded a backdated (to 1 November 2009) salary increase to a total fixed remuneration package of $139,596.00. This was the actual salary package enjoyed by the plaintiff as at July 2010.
[19] Exhibit P1, p 27.
Further within the letter, the author (Mr Rob Gordon, President South-East Asia and Senior Vice President of the defendant) informed the plaintiff as follows:-
In line with this review and the Company’s recent operating model announcement, we wish to confirm that your position title is Business Centre Manager – Eyre Peninsula and your direct line manager is Andrew Hannon – Operations Manager Storage and Handling.
All other employment terms and conditions as previously advised will remain unchanged...[20]
[20] Exhibit P1, p 27.
At the material times, the position fulfilled by the plaintiff was unique because of his responsibility for both terminals and country operations. These are generally called terminal sites and country sites. In relation to all other business managers in South Australia, those persons had responsibility for either the terminal sites or the country sites. There was no overlap of responsibility. As I have said above, I do not accept the plaintiff’s contention to the opposite concerning the country site at Bute.[21]
[21] T 96, 187-196.
Issues arose in the plaintiff’s management of the Port Lincoln terminal site in April 2010. Although the evidence is not completely clear, it appears that complaints were received concerning three specific matters. The first was what is described as contamination of grain through the detection of plastic pieces and dead rodent carcasses in a grain load for shipment. The second aspect of contamination of grain concerned the mixing of a load of canola beans of about 25 tonnes in a load of hard wheat. Canola beans are black in colour and are therefore quite obvious and visible within a load of wheat. In his evidence, the plaintiff said that there was a permissible limit of mixture of grains and that merely because some canola was mixed in with a load of wheat grain because of a technical/mechanical fault within the conveyer system, does not mean that the load of grain could or should be rejected. I am unable to accept this version of events put forward by the plaintiff. It is one thing to speak of a mixture of types of wheat grain but it is entirely another matter to confront a load of wheat in to which is mixed up to 25 tonnes of canola grain. It is to be expected that the master of the ship being loaded would reject such a situation. As the evidence developed, it became clear that the defendant contended (and the plaintiff did not seriously disagree) that about 25 tonnes of canola had been mixed with a shipment of wheat grain. Although it is not necessary for me to resolve the difference between the parties on this matter, I prefer the evidence of the defendant on this topic.
The third area of difficulty related to what is described as blending of grain. The evidence discloses that grain is received into silo on the basis of its classification made usually at the time of delivery. Samples are taken of grain carried within the trucks brought to silo by farmers. A number of tests are made including in respect of the quality of the grain, its moisture content, whether there was any other contamination within the grain (e.g. snails or other contaminants) and then the grain is graded. The grower is paid according to the grading. The process of grading is often contentious. The profitability of a farmer’s operation may depend upon it and so opinions are strongly held.
The grain is exported from the same silos according to a particular standard. That standard permits the mixing of grains up to the level of the standard. Therefore, if, for instance, there was to be an export of a shipment of grain at the standard of hard wheat grain (and this is grain that would attract the highest price payable to a grower), then the standard of hard grain can be achieved by mixing hard grain as classified upon receipt from the grower together with grain of a lesser standard and in respect of which a lower price had been paid to the grower. The task for a person such as the plaintiff was to ensure the proper admixture of grain across the classes of grains held in the silos to ensure that the grain exported achieved the particular and prescribed standard of hard wheat grain.
The prices vary because, for example, the standard of hard wheat grain is used for the wheat intended for flour milling. The lesser standard of feed grain is, as the name suggests, intended for such things as stock feed.
In the period prior to April 2010, the defendant contended that there had been difficulties encountered with the grain exported from Port Lincoln because of contamination and poor blending. The nature of the poor blending described by the defendant was that the grain was layered rather than being blended so that a sample taken from a ship’s cargo hold would indicate different types of grains in particular layers in the cargo hold rather than a mixture of grains to achieve a particular standard. In addition, if the sample was taken from the layer of grain of lesser quality, then the grain would not be assessed as achieving the standard required for the export market. This would create great difficulties at the port.
The defendant’s case was that these difficulties caused Mr Michael Hill who was then the Business Centre Manager for Adelaide, although the documents (exhibit P2) indicate the description of Mr Hill’s position as ‘Manager – Storage and Handling Strategy Planning’ and Mr Hannon, ‘Operations Manager – Storage and Handling’ (exhibit P2), to make a visit to Port Lincoln. Discussions occurred between Mr Hannon, Mr Hill and the plaintiff.[22]
[22] T 205-212.
The plaintiff denied that when Mr Hannon and Mr Hill came to visit him in about April 2010, they complained about or raised with him issues about canola contamination and layering on a consignment of wheat.[23] The plaintiff says that he raised issues with Mr Hannon, particularly about the canola. There was a discussion about how the problem had occurred because of a problem with a diverter valve[24] and there had been a leak into the system.[25] It was accepted that there was a real risk that the ship’s captain would not accept the specification[26] and as a result of this, he had a meeting with Mr Hill and Mr Hannon in Port Lincoln.[27] I am unable to accept the plaintiff’s version of events on these matters. It challenges credulity to suggest that despite Mr Hannon and Mr Hill visiting to deal with a matter about the performance of the plaintiff as Terminal Manager when, as the plaintiff contends, the meetings were not much more than mere formalities.
[23] T 209.13.
[24] T 210.23.
[25] T 211.1.
[26] T 212.21.
[27] T 212.26.
At about that time, there had been discussions commenced about the improvement of the site for the more efficient operating of the defendant’s business. This process appears to have begun in or about January, February or March of 2010. It was generally called the business improvement process.[28]
[28] T 212.31. See also T 319, 323, 373-374, 427-429.
Following the meeting between the plaintiff, Mr Hannon and Mr Hill at Port Lincoln, the plaintiff sent to Mr Hannon, Mr Hill and the General Manager Operations, Mr Don Drombolis, a document with the subject ‘Headcount Reduction – Eyre Peninsula’. The accompanying email states as follows:-
Andrew, Michael,
Following our recent discussions about manning levels and headcount reduction on EP (Eyre Peninsula) please find attached the latest update.[29]
[29] Exhibit P1, pp 28-32.
Attached to that document was a memorandum from the plaintiff to Mr Hannon, Mr Hill and Mr Drombolis dated 17 May 2010 (incorrectly dated in the exhibit) under the same subject heading.
Prior to that time, Mr Drombolis with the assistance of the other line managers including Mr Hannon, had commenced a review of the business of the defendant in South Australia. Following that review, a document (exhibit D4) was produced. This document[30] was an issues document which identified the relevant issues, defined them, identified who would lead a team of persons to deal with the issues and the committees involved in such a process. The plaintiff was named within the document as being responsible at a committee level or at a team leader level. For example, in relation to base level classifications concerning contaminants and visual defects, the plaintiff was the team leader in respect of classifications and other matters. He was named as a member of a number of committees: e.g. a committee to ensure cargo was blended evenly at all ports; a committee to review all sites to determine the number of employees utilised to perform each task and identify the best practice.
[30] Exhibit D4.
It follows that the process of review had been commenced and was in progress by April 2010. It had been implemented by Mr Drombolis after his initial reviews from the time he first became involved in the South Australian operation of the defendant during 2009. The document (exhibit D4) is a continuation of that process.
The plaintiff’s evidence was that the document of 17 May 2010[31] was a document that he prepared consistent with the requirements, as he understood them, of Mr Drombolis as communicated to him by Mr Hannon. In any event, it is quite plain from the email[32] that the document was produced following recent discussions between the plaintiff and Mr Hannon and Mr Hill. It is also apparent from the email that the document prepared by the plaintiff was directed at manning levels and headcount reduction on the Eyre Peninsula.
[31] Exhibit P1, pp 28-29, 31-32.
[32] Exhibit P1, p 28.
A reading of the accompanying document[33] discloses both the purpose and the recommendations of the plaintiff. It is informative to identify that the background sets out a number of important features. It reads as follows:-
[33] Exhibit P1, pp 29-32.
Background
In 2009, due to a combination of three years below average harvest receivals an extensive review of costs and efficiencies was undertaken. As part of the review, the overall structure of S&H [storage and handling] was assessed in order to identify any areas for improvement. On Eyre Peninsula a number of positions were made redundant which resulted in a headcount saving of 15 persons representing 13% of the permanent workforce. Despite returning to a much larger harvest for the 2009/10 season, with grower receivals on EP [Eyre Peninsula] exceeding 2.6 million tonnes, the reduction in headcount has continued. [34]
[34] Exhibit P1, p 29.
No evidence was given about the review of costs and efficiencies being undertaken due to the drought (although it may be assumed that this was an appropriate time for such a review to take place). There was also no evidence of the review of the overall structure of storage and handling on Yorke Peninsula.
The memo goes on to identify the 2010 reductions in employment and the reasons therefore as well as the changes that had occurred in 2010. There is then a current group headcount which disclosed 2009/10 receivables in tonnes, the current estimate of receivables, those in full time employment and those in part time employment across the various sites. What then follows is a discussion concerning group leaders’ succession and then the work at the terminals. It is clear from the evidence and from the documents that although the Thevenard facilities were not thereafter to be used for the export of grain because of the inability of the harbour to handle large panamax vessels, it was intended that there would be a replacement of those exports by the export of mineral sands, the export of gypsum and the export of salt. The estimation was that there was to be an export of approximately 3 million tonnes of grain and non grain product being loaded annually from the Thevenard terminal.
Following a discussion of the position at the Port Lincoln terminal, including a reference to the need to prevent the blockage of screens on the conveyers so as to prevent regular blocking and spilling of large volumes of grain (and the trial of larger screen mesh), the following paragraph is then set out:-
EP Structure
The overall structure of EP needs to be reviewed, starting at the top and brought in line and be consistent with the company model. At the business manager level the manager should be responsible for either ports or country facilities, not both.[35]
[35] Exhibit P1, p 32.

In his evidence, the plaintiff said that the content of that paragraph was something that had been put to him by Mr Hannon.[36] The plaintiff said that Mr Hannon told him that there was a need to develop a plan to align and restructure Eyre Peninsula in accordance with the company (the defendant) model going forward and that the defendant was going to implement that company model. He gave evidence that Mr Hannon said that there was a need to work through a process of developing a model and structure that fitted with the defendant’s overall plan[37] and this was explained on the basis that the Canadian model required a separation of divisions for upcountry storages as opposed to the shipping terminals. Therefore, it became necessary to develop a plan that would suit and fit in with what was likely to be developed in South Australia. He was following the direction that was given to him by Mr Hannon.
[36] T 129.
[37] T 129.24.
The plaintiff said that the content of the ‘EP Structure’ had been put to him in the discussions that he referred to in the accompanying email attached to the memo.[38] The result was that he was unsure of his position because with so many changes going on in the company and with people being made redundant, there was a level of unease within the organisation as to what would really happen. He said that he became unsure of his position but at the time that he wrote it, he had no inclination of what the future held for him. The plaintiff said that within about a day of having sent that memo he had a telephone conversation with Mr Hannon telling him that he was concerned about his particular role going forward and that he needed to have some form of conversation about what was being planned. He wanted everything to be put on the table. He said that Mr Hannon’s response was non-committal and that there were no particular plans at that point about his role going forward.[39] The plaintiff says that it was at that stage that he raised the possibility of a redundancy. He used the expression that he did not want to be ‘tapped on the shoulder’ and let out the door like a number of other staff. He says that he did not request a redundancy.
[38] T 130.10.
[39] T 132.11.
The plaintiff was cross examined on the content of that paragraph.[40] The plaintiff denied that the reference to the company practice at the time of allocating separate responsibilities to managers of company sites and managers of terminal sites was in line with his suggestion. [41] The plaintiff denied that what was said in the paragraph was his own recommendation. He said that all he was doing was recording on paper his discussion with Mr Hannon prior to that time.[42] That discussion concerned the business improvement model and the information that was required by the defendant to fit the Canadian model. All of this was put to him by Mr Hannon during the visit in April 2010.[43] The plaintiff was adamant that Mr Hannon required this recommendation of him because it accorded with what was happening in the rest of the operation of the defendant in Australia because it fitted in with the Canadian model.[44]
[40] T 214-216.
[41] T 214.4-6.
[42] T 214.14.
[43] T 214.22-23.
[44] T 214.24-37.
In his evidence, Mr Hannon denied that any such conversation had taken place. When he was asked further in cross-examination about where the discussion took place the plaintiff said that there were several discussions and some of the discussions were held in Adelaide at business managers meetings. One of those meetings took place, at the Grand Chifley Hotel on South Terrace which was in the early part of 2010 and at which he was told there would be a need to develop a plan that would fit in with the defendant’s company model. However he agreed that nowhere within the document[45] does he address any such plan or that it had its genesis at any such meeting.[46] The plaintiff also agreed that in the document, he makes no reference to the defendant’s model and he denied that he was volunteering the suggestion that on Eyre Peninsula the role should be split because he saw the good sense in it.[47]
[45] Exhibit P1, pp 29-32.
[46] T 215.21-24; T 216.1-9.
[47] T 216.25-28.
At that time, a document that was in circulation from the defendant was exhibit D4. It was a document which identified a number of issues to be addressed by the defendant. A number of them included matters within the purview of the plaintiff’s authority. These included classification of grains and the creation of an optimal classification working environment; employee training to that effect, the maximisation of the efficiency of equipment; the reduction of stock losses through improved storage, hygiene, pest control and maintenance; and a general labour review to determine the number of employees utilised to perform each site and to identify the best practice as well as implementation of best practice to all sites for similar tasks.
The plaintiff denied that by virtue of the existence of exhibit D4 that he understood that the defendant was taking a new direction through the processes being implemented within exhibit D4.
Mr Hannon emphatically denied that he had entered into any discussion with the plaintiff concerning the implementation of what was described as the Canadian model for the defendant or any split in the role of the plaintiff as Business Manager – Eyre Peninsula.[48]
[48] T 329-376.
I am satisfied that a review of exhibit D4 discloses that this step as claimed by the plaintiff is not contemplated within that document. Staying, for example, with the way in which the staff are described within this document, it is clear that persons in the position of the plaintiff were either team leaders or committee members dealing with particular issues. There is no doubt that under the heading ‘Labour Review’, the definition of the task was to determine and implement best practice operations on each site based on the number of required employees. On an objective view of the contents of the document, this is not a review at the level of deciding the future of persons such as the plaintiff or for that matter, persons such as Mr Hannon or Mr Hill. An ordinary reading of exhibit D4 discloses that any review of those positions would be the next step along the process.
In cross-examination, Mr Hannon said that this recommendation from the plaintiff under the ‘EP Structure’ came to him as ‘a bolt out of the blue’.[49] He also said that any discussions that had occurred to that time about the plaintiff’s role were concerned with the quality issues that had occurred on multiple vessels. He said he had visited Port Lincoln on a number of occasions, not just the once in April 2010 but many times before that and Mr Hill, the plaintiff and he were attempting to deal with performance issues such as vessel loading and other things.[50] He says as far as he was concerned, there was no time during those sorts of visits and those types of discussions to be dealing with more specific issues such as splitting of roles or adoption of any Canadian model of management. Rather, the plaintiff was told that the ‘spotlight’ was on the Eyre Peninsula and it was necessary to shift focus from the Eyre Peninsula (and implicitly the failings that were occurring at that place) by virtue of better management of the processes on Eyre Peninsula. Mr Hannon thought that all discussions at that time and leading up to 17 May 2010 were about questions of accountability. He said he used the term accountability a lot in his discussions with the plaintiff.[51]
[49] T 372.2.
[50] T 373.1-10.
[51] T 374.3-20.
I am not able to accept the version of events put forward by the plaintiff in this context. In the opinion that I have formed, this paragraph within the memo was not included as a result of any request made by Mr Hannon to the plaintiff. It may well have reflected what the plaintiff perceived his position to be after discussions directly with Mr Hannon and also with Mr Hannon and Mr Hill. In my opinion, the content of the paragraph is, when read in the context of the whole document, contiguous with the issues under discussion and is a recommendation that, objectively assessed, might reasonably be made by any business manager in the position of the plaintiff at that time.
The plaintiff said that the reason why he prepared the document of 17 May 2010[52] was because of the need to readjust the Eyre Peninsula workforce to reflect the fact that after three years of drought there would be an increased receipt of grain product into the Port Lincoln terminal and, inferentially, the Thevenard terminal and that it was necessary for there to be an adjustment of the status of staff. The previous plan had been to cover any staff deficiencies by using casual staff. However, the plaintiff said that the purpose of the memo was to change the status of the staff because he was seeking a larger permanent workforce.[53] He said there were a number of reasons for that. First was that harvest had returned to normal, a number of permanent staff had left during the drought and so there was a very inexperienced workforce and people, because of their casual status, were looking for permanent work elsewhere. That is, staff were looking for some assurance about the longevity of their employment. He said this document came following a discussion with Mr Hannon in which they decided they would go through what he described as a business improvement exercise.[54] He thinks that exhibit D4 was introduced during part of this process.[55]
[52] Exhibit P1, p 29.
[53] T 197.20.
[54] T 198.1-8.
[55] T 198.17-200.20.
However, the plaintiff also said that the business improvement process had not started when he submitted the personnel requisitions in February 2010. He said that those business requisitions were not approved. They were not approved because Mr Hannon told him that if he wanted to justify more staff, he would have to make out a number of justifications. Then there followed a series of conversations commencing in April 2010[56] and a number of discussions consistent with there being a commencement of a business improvement process and this included meetings with Mr Hannon and Mr Hill, sometimes together and sometimes separately. It also included meetings with the plaintiff’s operational coordinator and the production of a number of documents.[57]
[56] T 203.4.
[57] T 204.31-38.
Mr Hannon gave evidence that after the events before and during April 2010 concerning questions of quality and loading at terminals, he had a discussion with the plaintiff about quality control and the complaints from clients who had purchased grain through Thevenard. One client had received some plastic in a load of grain, another contained mice carcasses, there was another vessel that had not been blended correctly and one issue also related to an incorrect grain cell being loaded onto a vessel.[58] Mr Hannon said that he raised with the plaintiff those issues which were of real concern to the company and the discussions were about requiring improvement in quality control. There were also discussions about manning levels or headcount reductions specifically at Port Lincoln. The specifics of those discussions were the labour numbers at the rail shed for the purpose of unloading trains and labour numbers at the shipping screens at which observations were made about grain being loaded onto ships. There had been a previous issue about shipping screens being blocked and grain overflowing. It was after all of these issues were raised that the document in exhibit P1, pages 29-32 was received.
[58] T 332-334.
Mr Hannon emphatically denied that the document of 17 May 2010 had any connection with the process of review described in exhibit D4. Mr Hannon also had no memory of the document at exhibit P1, pages 29-32 being received in concert with or associated with the request for more permanent labour which had been received by him from about February 2010.[59]
[59] T 334.30-38.
Mr Hannon said that he was surprised to receive a document which had the paragraph under ‘EP Structure’ on page 3 thereof[60] because he had never discussed that topic with the plaintiff previously and the plaintiff had never raised a topic like that with him.[61] All of this was unsolicited and volunteered by the plaintiff. Mr Hannon said that nothing he had done or said would have led to the plaintiff responding in that way. He said it was significant because, from his point of view, it was really the only part of the memo which was not a statement of fact which he really already knew and that it was really part of a recommendation.[62]
[60] Exhibit P1, p 32.
[61] T 335.23-30.
[62] T 335-336.
Mr Hannon also said in cross-examination that the memo[63] was not sent in response to any requisition made by the plaintiff about a need for an increase in permanent staff or the plaintiff being told anything about a need to review the whole of the business on Eyre Peninsula rather than dealing with ad hoc employment of staff issues.[64] Mr Hannon’s attitude was that if there was to be a request for more permanent employees, it would need to be justified by a proposal in relation to labour numbers. From his point of view, from early 2010, he knew nothing of any plan of Mr Drombolis (if it existed) of a contemplation to split the plaintiff’s role on Eyre Peninsula as well as splitting his own role. He denied telling the plaintiff that such splits of positions were on the cards because of the adoption of the Canadian model. He denied that he told him that in making any proposal he would need to look at the overall structure of Eyre Peninsula and he also denied that the content of the paragraph ‘EP Structure’ was something that the plaintiff had been directed to include by the defendant.[65]
[63] Exhibit P1, pp 29-32.
[64] T 370.3.
[65] T 371.1-6.
The topic of the memorandum of 17 May 2010 is ‘Headcount Reduction – Eyre Peninsula’. [66] It identifies reductions in the number of employees, changes to the status of those employees, the current group headcount, the problems of succession because of illness and the changing nature of the work being done at the terminal and the bulk loading plant. The undercurrent of the matters raised within the memo indicate an increase in workload at the terminals including the operation times of the terminals and the bulk loading plant with a concomitant reduction in the number of permanent employees and experienced employees to carry out that increased level of work. It is after that discussion that the recommendation is made by the plaintiff in relation to ‘EP Structure’. In my opinion, in that background and context, the inclusion of that paragraph is not incongruous. Rather, consistent with the wholesale theme of the memo about what has happened and what may need to happen, the recommendation under the heading ‘EP Structure’ is consistent with a recommendation to review the whole model to ensure that both country operations and terminal operations and the bulk loading plant can be managed properly in light of what is apparently a reduction in the overall labour workforce. Part of the background of this memo is, as Mr Hannon said (and this was not challenged), that if the plaintiff was to justify the appointment of more permanent staff, he would have to do so in a way that informed the defendant in a manner that not merely recommended the appointment of a particular person to a permanent role. Rather it was necessary to justify that appointment in the background of the whole operation. Thus, it could easily be understood, that a person in the position of the plaintiff who did not have the level of permanent staff that he required, who did not have the level of experienced group leaders because of illness or resignations or other reasons and because of the need to employ greater casual staff, wanted greater hands on management of the Thevenard and the Port Lincoln terminal and bulk loading plants on the one hand and the country operations on the other. All of the issues that had been the subject of the complaint fell within the rubric of these issues.
[66] Exhibit P1, p 29.
For all of those reasons, I am unable to accept the version of events put forward by the plaintiff concerning the allegation of the insistence by Mr Hannon that the paragraph under ‘EP Structure’ be included within the document at exhibit P1, page 29, the memorandum of 17 May 2010.
There is nothing associated with the recommendation which indicates that the plaintiff’s own recommendation was not satisfactory to him and it was not a matter that he would embrace as an employee of the defendant. The evidence given by the plaintiff was that the document was tendered to management but without any comment by him about its effect upon him. In evidence in chief, the plaintiff said that he was unsure how the recommendation affected the position of Eyre Peninsula and this was because there were so many changes going on in staffing and in senior positions. He described his position as being uncertain and the email was written at a time when he had no inclination of what was ahead of him.[67] If the plaintiff had been in a position where he was putting forward a document as a recommendation but at the behest of someone else, then it is a fair inference that somewhere he would have raised that fact. This is more so in the event that he disagreed with what he was allegedly told to recommend. Nothing was said or done by the plaintiff.
[67] T 130.23.
The plaintiff then prepared a memorandum of 20 May 2010, called an overview.[68] It was sent to Mr Hannon and was copied to Mr Drombolis and Mr Hill. The overview suggested that it followed the earlier memorandum of 17 May 2010.[69] In the overview, the plaintiff says that he is recommending a restructure for Eyre Peninsula and attached was a proposed organisational chart. That organisational chart is disclosed at exhibit P1, pages 38-39. At the head of each of those charts is a business manager. Page 38 of this document refers to terminals and page 39 refers to country operations. There are no names contained on the face of those pages. The plaintiff addresses operations coordinators and suggests that there be a change so that there is a Thevenard terminal operations coordinator, a Western Eyre Peninsula operations coordinator based at Streaky Bay, an Eastern Eyre Peninsula operations coordinator based at Cummins and a Port Lincoln terminal operations coordinator. Within the memorandum at exhibit P1, pages 36-37 are comparisons of positions and structure for terminal operations, country operations, Eyre Peninsula maintenance operations and Eyre Peninsula bulk loading plant operations. The plaintiff gave evidence that the purpose of sending the second memo was to continue with the business improvement process consistent with the theme that had been developed in the previous memo.[70] When asked why he had prepared two charts, the plaintiff said that there wasn’t enough room on one page to fit all of the chart.
[68] Exhibit P1, p 35 et seq.
[69] Exhibit P1, p 29.
[70] T 132.31; Exhibit P1, p 29.
Following the delivery of that document,[71] Mr Michael Hill visited the plaintiff at Eyre Peninsula. The plaintiff gave evidence that he and Mr Hill were in a car travelling from Port Lincoln to Lock or some country site. In the course of that journey, Mr Hill said to the plaintiff that the defendant was considering restructuring Eyre Peninsula. He said it was likely that the role performed by the plaintiff would be split into two and that it was likely that the plaintiff would be offered either the country role or the terminal role.[72]
[71] Exhibit P1, pp 35-39.
[72] T 141.30-38.
In that same conversation, the plaintiff said that he told Mr Hill that he wasn’t really happy about those plans and that he wasn’t comfortable particularly about moving into a diminished role. That was really the end of the conversation.[73] This followed his conversation with Mr Hannon where Mr Hannon had said that there was no change being considered for his role. The plaintiff surmised that that was unusual and he rather thought that Mr Hill was telling him one thing and Mr Hannon was telling him something completely different.[74]
[73] T 142.21.
[74] T 142.21-38.

Priestley JA also considered the implication of the term as a matter of law.[360] His Honour found that the test of reasonableness also fulfilled the test of necessity although perhaps not in an absolute sense. His Honour differentiated between general commercial contracts and contracts, for example, of employment.
[360] Renard Constructions (1992) 26 NSWLR 234, 260G – 261A-E.
In the same decision, Priestley JA also considered the implied term of reasonableness as a concept of good faith at page 263G et seq. His Honour identified that the concept of a duty of good faith in contracting was not yet recognised in Australian law. His Honour was therefore careful to distinguish between the ad hoc implied term of reasonableness and, alternatively the implication of the term of reasonableness as a matter of law and the concept of reasonableness arising within concepts of good faith.
Meagher JA decided the appeal on a different basis and found that, as a matter of fact, when the principal came to make his decision, it was so distorted by prejudice and misinformation, that he was unable to comprehend the facts in respect of which he had to pass judgment. His Honour found that:-
Since he was unable to be “satisfied” — and, if it matters, that inability arose solely through his own fault — his action in taking over the contract and excluding the contractor lacked contractual justification and amounted to a repudiation.[361]
[361] Ibid 276.
Meagher JA made that finding following a discussion at pages 275D-G that any implied term of reasonableness is an unsatisfactory solution. His Honour held:-
Cole J rejected any submission that reasonableness could be imported as a limitation on the exercise of cl 44 powers. In my opinion he was right to do so. Such a limitation, if it existed, could only arise either from the express words of the contract or by way of an implied term. Obviously enough it does not arise as a matter of construction of cl 44. It is not referred to expressly in that clause, nor is it to be discerned as a matter arising by necessary implication from the words used. Nor, in my view, is there any room to imply a term. Any such attempt could not survive the tests adumbrated by the High Court in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 and Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596. Moreover, it suffers a more basic defect: it is difficult, if not impossible, to ascribe any sensible meaning to such a concept in this connection. As Taylor J said in a very different context:
“... But reasonableness, alone, is an abstract concept and does not by itself provide a test for determining what charges may or may not be made; it is a useful guide if, and only if, we are aware of the various matters which must be considered where the necessity arises of determining whether particular charges are or are not reasonable”
(Armstrong v State of Victoria [No 2] (1957) 99 CLR 28 at 88-89.)
In the present case the parties apparently interpreted the concept of reasonableness as involving the balancing “of the interests of the principal against those of the contract”. There is no possible basis for inflicting such a duty on the principal, and his Honour was correct to repudiate it. There is no reason why the principal should have regard to any interests except his own.[362]
[362] Ibid 275D-G.
Handley JA gave consideration to the question of an implied term of reasonableness at page 279F-280. However, it is necessary to note that Handley JA agreed with the conclusion of Meagher JA that the principal’s decision was based upon a fundamental misunderstanding of relevant matters and was grounded on misleading, incomplete and prejudicial information.[363] In those circumstances, as Meagher JA concluded, the principal could not have given bona fide consideration to the contractor’s submissions and therefore could not have been satisfied that the power that had arisen should be exercised. There was no dispute that such findings were open to be made on the materials. However, Handley JA then went on to say:-
For myself I prefer to regard these matters as demonstrating that the principal's decision, however honest, was objectively unreasonable and therefore an invalid exercise of the power. In agreement with Priestley JA, I would hold that as a matter of construction the power must be exercised reasonably. However I have reached this conclusion by a somewhat different route...[364]
[363] Ibid 279B.
[364] Ibid 279B-C.
At page 279 et seq Handley JA said the following:-
Apart from the great width of these powers, there are three other matters which support the existence of some restraint on their exercise apart from the normal requirement of honesty. The power may only be exercised after the principal has given the contractor “notice in writing to show cause... why the powers... should not be exercised”. The notice must state that it is given under the clause and “shall specify the default, refusal or neglect...upon which it is based”. It is clear that the power is only exercisable for “cause” and after the contractor has been given an opportunity to be heard. This is some indication that the contractor is entitled to appeal to objective considerations including questions of reasonableness in showing cause against the exercise of the powers. The very notion of showing cause seems inconsistent with the view that the principal will be entitled to act, within the limits of honesty, on his own idiosyncratic opinion.
The second matter depends on whether “the satisfaction of the principal” in cl 44.1 refers to an opinion which is reasonable or to one which is merely honest. The implication of reasonableness is readily made: see Hillas and Co Ltd v Arcos Ltd [1932] All ER Rep 494; (1932) 38 Com Cas 23, where (at 507; 43-44) Lord Wright referred to: “... the legal implication in contracts of what is reasonable, which runs throughout the whole of modern English law in relation to business contracts.”
Where the question has arisen in the context of conditions precedent or subsequent the courts have sometimes held that honest dissatisfaction has been sufficient: see Meehan v Jones and Docker v Hyams [1969] 1 WLR 1060; [1969] 3 All ER 808. In the context of certification clauses Devlin J said in Minister Trust Ltd v Traps Tractors Ltd [1954] 1 WLR 963 at 973; [1954] 3 All ER 136 at 145:
“... there may be a question (again depending upon the implication to be drawn from the contract) whether the dissatisfaction must be reasonable, or whether it can be capricious or unreasonable so long as it is conceived in good faith ... The tendency in modern cases seems to be to require the dissatisfaction to be reasonable.”
In Stadhard v Lee (1863) 3 B & S 364; 122 ER 138, the question arose in the context of a power in a head contractor if the sub-contract works did not proceed “as rapidly and satisfactorily as required” for he or his agent to enter into possession of the works and employ whatever number of men they considered necessary at the expense of the sub-contractor. Cockburn CJ, delivering the judgment of the court (at 371-372; 141), said:
“... stipulations and conditions of this kind should, where the language of the contract admits of it, receive a reasonable construction, as it is to be intended that the party in whose favour such a clause is inserted meant to secure only what was reasonable and just ... where the language of the contract will admit of it, it should be presumed that the parties meant only what was reasonable, yet, if the terms are clear and unambiguous, the Court is bound to give effect to them...”
It was held in that case that the particular contract only required the head-contractor to act honestly. However there was no provision for the sub-contractor to be given an opportunity to show cause against the formation of the opinion and there was no arbitration clause.
It seems to me that cl 44.1 should be construed as requiring the principal to act reasonably as well as honestly in forming the opinion that the contractor had failed to show cause to his satisfaction and thereafter in deciding whether or not to take over the whole or any part of the remaining work or to cancel the contract: see generally Amann Aviation Pty Ltd v Commonwealth of Australia (1990) 22 FCR 527 at 532, 542-544; 92 ALR 601 at 607; 616-618 and The Commonwealth v Amann Aviation Pty Ltd (1991) 66 ALJR 123; 104 ALR 1.[365]
[365] Ibid 279F-280F.
It is necessary to identify that there is no settled authority in Australia on a standard of good faith and its application generally to contracts. In her Honour’s decision in Barker, Kiefel J dealt with the current situation concerning the alleged duty of good faith at paragraphs [103]-[110] as follows:-
[103]The English cases referred to above, which have applied the term of trust and confidence, have done so by reference to conduct which could be described as unfair towards the employee. It will be recalled that the conduct in question in those cases involved the wrongful suspension of an employee, an employer's improper conduct of disciplinary proceedings and discrimination as between employees. The respondent's written outline of submissions acknowledges that unfairness would be a touchstone for breach of the term of trust and confidence.
[104] Fairness in dealings as between contracting parties may be understood as an aspect of a duty of good faith, which has been accepted in other legal systems and is wider than that of honesty. It has been observed[366] that in some legal systems good faith is regarded as a vitally important ingredient for a modern general law of contract, and that this raises the question how other legal systems cope without it.
[105] Acceptance of a standard of good faith in all contractual relationships is not confined to civilian legal systems. In the United States, §205 of the Restatement of the Law Second, Contracts contains an obligation of good faith and fair dealing. Amongst the meanings of good faith identified by the Restatement is that of the Uniform Commercial Code as applied to merchant contracts ("honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade"), although it is recognised that its meaning varies somewhat with the context.[367] In any event, it is the view of some that good faith reflects a standard of conduct rather than operating as a fixed rule.[368]
[106] In 1766, Lord Mansfield considered that good faith was a governing principle applicable to all contracts and dealings.[369] Aspects of it may be evident in the duty of co-operation referred to in Mackay v Dick. However, in more recent times, English law has for the most part turned its face against the imposition of a general duty of good faith,[370] preferring the predictability of a legal outcome in a case to "absolute justice".[371]
[107] The question whether a standard of good faith should be applied generally to contracts has not been resolved in Australia.[372] Neither that question, nor the questions whether such a standard could apply to particular categories of contract (such as employment contracts) or to the contract here in issue, were raised in argument in these proceedings. It is therefore neither necessary nor appropriate to discuss good faith further, particularly having regard to the wider importance of the topic.
[108] It is sufficient for present purposes to observe that the more specific requirement, deriving from notions of fairness, that an employer must attempt to redeploy an employee before terminating his or her employment does not arise from, and is not an incident of, the legal relationship between employer and employee. Contracts of employment are not rendered futile because of the absence of a term to this effect. To the contrary, it would not be possible for all employers to give effect to such a term. This tells against the application of such a requirement as a universal rule. It cannot be said to be "necessary" in the sense described earlier in these reasons.
[109] In summary, the Employment Agreement between the appellant and the respondent does not require for its efficacy the implication of the term of trust and confidence for which the respondent contends. That term is not necessary given the provisions of cl 8. More generally, contracts of employment do not require such an implication for their effective operation.
[110] It remains to add that, if such a term were sought to be implied into the Employment Agreement, the problem of inconsistency, to which Lord Hoffmann alluded in Johnson v Unisys, would arise. A general obligation of redeployment prior to termination, for breach of which damages would follow, contradicts the terms of cl 6, which permits the appellant to terminate the employment by giving four weeks' notice or payment in lieu of it. The fact that cl 8 contains a similar requirement in the case of redundancy does not prevent this inconsistency arising, although that latter clause does point to what might have been a basis for relief. [373]
[366] Whittaker and Zimmermann, "Good faith in European contract law: surveying the legal landscape", in Zimmermann and Whittaker (eds), Good Faith in European Contract Law, (2000) 7, 13 cited in Barker [2014] HCA 32, [104].
[367] American Law Institute, Restatement of the Law Second, Contracts, (1979), §205, Comment a cited in Barker [2014] HCA 32, [105].
[368] Lücke, "Good Faith and Contractual Performance", in Finn (ed), Essays on Contract, (1987) 155, 166 cited in Barker [2014] HCA 32, [105]
[369] Carter v Boehm (1766) 3 Burr 1905, 1910 [1766] EngR 157; [97 ER 1162 at 1164] cited in Barker [2014] HCA 32, [106].
[370] The recent decision of Leggatt J in Yam Seng Pte Ltd v International Trade Corporation Ltd [2013] 1 All ER (Comm) 1321, 1350-1353 [131]-[142] considers the possibility of implying a term of good faith, although arguably only in particular contracts and by a process of construction: see Mid Essex Hospital Services NHS Trust v Compass Group UK and Ireland Ltd (trading as Medirest) [2013] BLR 265, 287 [150] cited in Barker [2014] HCA 32, [106].
[371] Goode, "The Concept of 'Good Faith' in English Law", Paper delivered at Centro di studi e ricerche di diritto comparato e straniero, March 1992, referred to in Whittaker and Zimmermann, "Good faith in European contract law: surveying the legal landscape", in Zimmermann and Whittaker (eds), Good Faith in European Contract Law, (2000) 7, 15 cited in Barker [2014] HCA 32, [106].
[372] Royal Botanic Gardens and Domain Trust v South Sydney City Council[2002] HCA 5; (2002) 240 CLR 45, 63 [40], 94 [156]; [2002] HCA 5 cited in Barker [2014] HCA 32, [107].
[373] Barker [2014] HCA 32, [103]-[110] (some citations omitted).
In Riverwood, Mansfield J made reference to the implication of a term in a contract that a power must be exercised reasonably having regard to the nature of the contract and the entitlements which exist under it.[374] In that context, Mansfield J was discussing the power, in this case of an employer, to vary the terms of the policy documents and therefore not to do so capriciously or in a way that acted unfairly towards the respondent. In its further submissions, the defendant criticised the reference to the decision in Renard on the basis that it was distinguishable from general employment contract cases because it was heard in the New South Wales unfair contracts jurisdiction. My reading of that decision does not indicate that the New South Wales unfair contracts legislation had any part to play in the decision of the court. I do agree that employment contracts are, by their nature, treated slightly differently from general contracts. That much is clear from the settled law in relation to implications of implied terms into those contracts. Keifel J in Barker summarised the principles at paragraph [56]-[62] as follows:-
[56] The term of trust and confidence recognised in Malik is one implied by law.[375] It is intended to apply to all contracts of a particular class or description, namely contracts of employment. It may be distinguished from a term that it is necessary to imply to give business efficacy to a particular contract[376], which focuses on the form of a contract and its express and unique terms.[377] Implication of a term by law involves "a search, based on wider considerations, for such a term as the nature of the contract might call for, or as a legal incident of this kind of contract."[378] In either case, a requirement for the implication of a term is that it be necessary in the respective senses which will shortly be discussed. A test of necessity does not appear to have been applied in Malik.
[57] A covenant for quiet enjoyment furnishes a good example of a term which will be implied in contracts between landlord and tenant, because it is a necessary incident of the relationship between landlord and tenant. Liverpool City Council v Irwin[379] furnishes another. At issue in that case was whether there should be implied a covenant, on the part of a local authority (which was the landlord of a multi-occupied building), to keep in repair common parts of the building (such as lifts, staircases, rubbish chutes and passages), over which it retained control. Lord Wilberforce considered that no novel approach was involved in implying such a covenant.[380] The use of the parts of the building in question was essential to the tenancy.
[58] A similar approach had been taken in Miller v Hancock,[381] to which Lord Wilberforce referred. In that case, Bowen LJ held that, without the implication of a term requiring a landlord to maintain a staircase in leased premises, the whole transaction would be futile. It would be rendered "inefficacious and absurd". In Irwin, Lord Wilberforce regarded this reasoning as "common sense".[382]
[59] Scally v Southern Health and Social Services Board[383] involved obligations arising from the relationship of employer and employee. It was referred to by Lord Steyn in both Malik[384] and Johnson v Unisys Ltd[385] as being illustrative of developments in the law relating to employers' obligations. On another view, Scally may be seen to adopt an approach similar to that in Irwin. In Scally, a change to the regulations governing a statutory superannuation scheme permitted employees who had joined the scheme late to purchase "added years" of pension entitlements, but the right could be exercised only within a limited time of the regulations coming into force and thereafter on less favourable terms. The question identified by Lord Bridge of Harwich was whether the law would imply a contractual obligation, on the part of the employer, to take reasonable steps to bring the existence of the contingent right to the notice of employees.[386] His Lordship considered that the implication could not be justified for the sake of giving business efficacy to the contract of employment as a whole. However, since the employee's entitlement to enhance the pension would be of no contractual effect unless the employee was made aware of it, it was necessary to imply an obligation on the part of the employer "to render efficacious the very benefit which the contractual right to purchase added years was intended to confer."[387] His Lordship stressed that the criterion for the implication was necessity, not just reasonableness.[388]
[60] In Byrne v Australian Airlines Ltd,[389] McHugh and Gummow JJ observed that both Irwin and Scally had adopted the test of "necessity". Their Honours observed that, in Scally, the term implied was a necessary incident of a definable category of contractual relationship. Their Honours explained that many of the terms now said to be implied by law in various categories of cases reflect the concern of the courts that, without the term, the enjoyment of the rights conferred would be "rendered nugatory, worthless, or ... seriously undermined".[390] It is in this sense that the word "necessity" is used. In their Honours' view, the notion of necessity has been crucial in modern cases when the law has implied a term as a matter of law for the first time. In Breen v Williams,[391] Gaudron and McHugh JJ observed that the notion of necessity is central to the rationale for an implication of this kind. The requirement of necessity has been confirmed by a number of decisions of this Court since Byrne and Breen.[392]
[61] The courts will also imply an obligation on the part of each party to a contract to co-operate in the doing of acts necessary to performance, or to enable the other party to secure a benefit provided by the contract.[393] Such an obligation may be traced to Mackay v Dick.[394]
[62] In the sphere of terms implied to render efficacious a particular contract, necessity is also required. In BP Refinery (Westernport) Pty Ltd v Shire of Hastings[395], it was said that no term will be implied if the contract is effective without it and that any implied term must be so obvious that it "goes without saying".[396]
[374] Riverwood (2000) 177 ALR 193, 223.
[375] Malik v Bank of Credit and Commerce International SA (In Compulsory Liquidation) [1997] UKHL 23; [1998] AC 20, 45 cited in Barker [2014] HCA 32, [56].
[376] Lister v Romford Ice and Cold Storage Co Ltd[1956] UKHL 6; [1957] AC 555, 576 per Viscount Simonds; Liverpool City Council v Irwin[1976] UKHL 1; [1977] AC 239, 255 per Lord Wilberforce; Codelfa Construction Pty Ltd v State Rail Authority of NSW[1982] HCA 24; (1982) 149 CLR 337, 345-346 per Mason J; [1982] HCA 24; Byrne v Australian Airlines Ltd (1995) 185 CLR 410, 448 per McHugh and Gummow JJ; [1995] HCA 24 cited in Barker [2014] HCA 32, [56].
[377] Byrne v Australian Airlines Ltd (1995) 185 CLR 410, 448 cited in Barker [2014] HCA 32, [56].
[378] Liverpool City Council v Irwin[1976] UKHL 1; [1977] AC 239, 255 cited in Barker [2014] HCA 32, [56].
[379] [1976] UKHL 1; [1977] AC 239 cited in Barker [2014] HCA 32, [57].
[380] Liverpool City Council v Irwin[1976] UKHL 1; [1977] AC 239, 254 cited in Barker [2014] HCA 32, [57].
[381] [1893] 2 QB 177, 180-181 cited in Barker [2014] HCA 32, [58].
[382] Liverpool City Council v Irwin[1976] UKHL 1; [1977] AC 239, 255 cited in Barker [2014] HCA 32, [58].
[383] [1992] 1 AC 294 cited in Barker [2014] HCA 32, [59].
[384] [1997] UKHL 23; [1998] AC 20, 46 cited in Barker [2014] HCA 32, [59].
[385] [2003] 1 AC 518, 531 [18] cited in Barker [2014] HCA 32, [59].
[386] Scally v Southern Health and Social Services Board [1992] 1 AC 294, 304 cited in Barker [2014] HCA 32, [59].
[387] Scally v Southern Health and Social Services Board [1992] 1 AC 294, 306 cited in Barker [2014] HCA 32, [59].
[388] Scally v Southern Health and Social Services Board [1992] 1 AC 294, 307; see also Codelfa Construction Pty Ltd v State Rail Authority of NSW[1982] HCA 24; (1982) 149 CLR 337, 346, discussing terms implied into a particular contract cited in Barker [2014] HCA 32, [57].
[389] (1995) 185 CLR 410, 451-452 cited in Barker [2014] HCA 32, [60].
[390] Byrne v Australian Airlines Ltd (1995) 185 CLR 410, 450, referring to Nullagine Investments Pty Ltd v Western Australian Club Inc[1993] HCA 45; (1993) 177 CLR 635, 647-648, 659; [1993] HCA 45 cited in Barker [2014] HCA 32, [60].
[391] (1996) 186 CLR 71, 103; [1996] HCA 57 cited in Barker [2014] HCA 32, [60].
[392] Jarratt v Commissioner of Police (NSW)[2005] HCA 50; (2005) 224 CLR 44, 68 [78]; [2005] HCA 50; Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd[2006] HCA 55; (2006) 229 CLR 577, 596 [59]; [2006] HCA 55; Copyright Agency Ltd v New South Wales[2008] HCA 35; (2008) 233 CLR 279, 305-306 [92]; [2008] HCA 35 cited in Barker [2014] HCA 32, [60].
[393] Butt v M'Donald (1896) 7 QLJ 68, 70-71; Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd[1979] HCA 51; (1979) 144 CLR 596, 607; [1979] HCA 51; Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd[2006] HCA 55; (2006) 229 CLR 577, 584 [14], 628 [156] cited in Barker [2014] HCA 32, [61].
[394] (1881) 6 App Cas 251, 263 cited in Barker [2014] HCA 32, [61].
[395] (1977) 180 CLR 266, 283 cited in Barker [2014] HCA 32, [62].
[396] Barker [2014] HCA 32, [56]-[62] (citations included).

In my opinion, it is not correct as the defendant contends, that the general principles developed in Renard concerning implied terms are distinguishable from general employment contract cases. To the contrary, in my view, the general nature of the question of implication of terms of reasonableness as discussed in Renard, are equally applicable to employment contract cases. However, that view is also tempered by the view that concepts of reasonableness must not be confused with aspects of good faith and this appeared to be implicit in the approach of Priestley JA and Handley JA in Renard.
It follows that based upon the authorities cited by Mansfield J in Riverwood to support the implied terms set out in paragraph [152] of that decision, it is only the decision in Renard concerning the implied term requiring the exercise of a power reasonably that finds support in those authorities. And I reiterate that the comments of Mansfield J in that paragraph were obiter.
Notwithstanding, in Goldman Sachs JBWere Services Pty Ltd v Nikolich (‘Goldman’),[397] Marshall J at [122] referred to the decision of Mansfield J in Riverwood at [152] without any examination of the authorities cited by Mansfield J. At [123], Marshall J found that it was erroneous to suggest that the appellant in that case was not free (as a matter of contract) to make any changes in its policy document without the consent of all of its employees. Marshall J cited the decision of Kitto J in Thorby v Goldberg (‘Thorby’)[398] where his Honour said:
...Loftus v Roberts (1902) 18 TLR 532... decides only that where words which by themselves constitute a promise are accompanied by words which show that the promisor is to have a discretion or option as to whether he will carry out that which purports to be the promise, the result is that there is no contract on which an action can be brought.[399]
[397] [2007] FCAFC 120.
[398] (1965) 112 CLR 597.
[399] Ibid 605.
Marshall J distinguished that position from the position in Goldman because his Honour characterised the position in Goldman as being that there was an obligation to adhere to the obligations under the policy so long as the policy was in existence. It was open to Goldman to vary the terms of the policy but any revised policy provision would have effect only subject to the matters raised by Mansfield J in Riverwood. His Honour again quoted Kitto J in Thorby as follows:-
It is only where future agreement is required in order that the agreed provisions and those to be agreed shall operate together as one contract that the agreed provisions cannot be treated as themselves constituting a contract. [400]
[400] Thorby (1965) 112 CLR 597, 603.
In the case at Bar, future agreement is not required because the agreed position between the parties is that the contract of employment included by reference the policies as they were amended from time to time.
Black CJ did not consider Riverwood. The other Justice of Appeal, Jessup J considered Riverwood but did not consider that it was necessary to use that part of the Riverwood decision (at paragraph [152]) in the Goldman action. His Honour summarised his approach at [287] by saying that he would have no difficulty in following the approach which was taken in Riverwood but that, properly read, Riverwood turned entirely upon its own facts and those facts were different from the facts in Goldman.
Notwithstanding the view expressed by Marshall J, I am unable to read the decision of Jessup J in Goldman as accepting the terms as formulated by Mansfield J in Riverwood. For example, Jessup J did not address the implied term that an employer would act with due regard for the purposes of the contract of employment, that it would not act capriciously and would not act unfairly towards the respondent. Conversely, the approach of Jessup J, consistently with the approach of Meagher JA in Renard was to look at the whole of the facts and circumstances that may have had the potential to assist in the process of the inferences that might be drawn from the relevant circumstances at the time of or soon after the formation of the contract of employment. His Honour refused to enter into an exercise of ‘cherry picking’ the similarities between the factual circumstances in Riverwood and the factual circumstances in Goldman. He found that such an approach would ‘... subordinate a proper consideration of all the relevant circumstances...’.[401] At [289], his Honour distinguished Riverwood on its facts.
[401] Goldman [2007] FCAFC 120, [288].
A number of other authorities have applied Riverwood: Health Administration Corporation v Crocker.[402] The decision was referred to in Foster v Rinker Australia Pty Ltd[403] but the reference is inconclusive.
[402] (2004) 138 IR 147.
[403] (2007) 169 IR 10.
As matters stand, the Goldman decision discloses a difference between two of the judges of the Federal Court as to the use which may be made of the decision of Mansfield J in Riverwood. Marshall J would apply the decision and so decided to constrain Goldman’s power to vary the policy document by virtue of an implied term requiring Goldman to act with due regard for the purposes of the contract of employment, not to act capriciously and arguably not to act unfairly towards the employee. Jessup J did no more than refer to the existence of Riverwood, approve the approach in Riverwood but without accepting the existence of the implied terms.
The defendant contends that on the basis of the decision of the High Court in Byrne v Australia Airlines Ltd (‘Byrne’)[404] a term will only be implied into a class of contracts such as employment contracts where the implication is necessary. I have made previous reference to the decision in Byrne in the passages quoted from Keifel J in Barker. In my opinion, the question of whether Riverwood is applicable and whether it stands for the authority indicated by Marshall J in Goldman or in the Health Administration Corporation v Crocker decision is unclear. In my opinion, the decision of Jessup J in Goldman is instructive. As I read that decision, Jessup J is doing no more than reiterating one part of the approach favoured by Priestley JA and Handley JA in the Renard decision concerning concepts of implied terms about ‘reasonableness’. My reading of Jessup J’s decision was that, notwithstanding his Honour’s attitude to the question of implied terms, his Honour ultimately preferred the approach of, for example, Meagher JA in Renard that requires a proper consideration of all of the relevant circumstances in that case. It is to be recalled that Meagher JA favoured the approach that, as a matter of fact, a mistake of law by the principal could be identified because of the erroneous approach of the principal, its preconceptions and the prejudice suffered by the contractor as a result when the principal came to make its decision to terminate the relevant contract. In those circumstances, when assessed objectively, the process used by the principal in making its decision could be identified as constituting a mistake of law. As I read the decision of Jessup J in Goldman, that is the approach that his Honour would favour. It obviates the necessity for a consideration of questions of implied terms.
[404] (1985) 185 CLR 10.
However, in the case at Bar, the position contended for by the defendant is that, if I am wrong about the repudiation of the contract on the evening of 25 July 2010 and that, as a result, the contract was still on foot at, say, the close of business on 26 July 2010, the defendant was in a position to amend the terms of the redundancy policy as it existed and therefore formed part of the contract of employment. I have already identified the two further matters included within the redundancy policy as a result of that amendment (and the deletions). I have identified that a version of the former ‘transmission of business’ term was now to be included within the policy covering the circumstances where alternative employment is offered and thereby disentitling an employee who loses one position from claiming a redundancy in the event that another position is available or may be obtained within the workplace of the employer.
In making the decision to vary the terms of the policy, the defendant employer has therefore exercised a discretion. In the exercise of that discretion the defendant employer has decided to narrow the scope of the availability of a redundancy for the employees of the defendant. That amendment was brought about without any consultation and was unilateral on the part of the employer. If it was necessary for me to decide the matter, my conclusion would be that consistent with the approach of Handley JA in Renard, there is sufficient to indicate unreasonable conduct on the part of the defendant in causing such an amendment to be made unilaterally and then carried into effect and that thereby, such amendment would breach an ad hoc implied term of the contract of employment requiring reasonableness by the parties in implementing its terms. In their further submissions, the defendant has suggested that the furthest that the alleged implied term could extend would be to require the defendant not to act without due regard for the purposes of the contract of employment and not to act capriciously. In my opinion, in so acting, the defendant has not acted with regard for the purposes of the contract of employment. Having regard to the extent of the change of the policy as a term of the contract of employment, a unilateral amendment in its terms may well meet the descriptor of capricious but I do not have to decide that matter.
A pleading was made by the plaintiff of a breach by the defendant of s 52 of the Trade Practices Act 1975 (Cth) (‘Trade Practices Act’). At paragraph 22 of the statement of claim, the plaintiff pleads that if the defendant did not make a definite decision that it no longer required the plaintiff’s job to be done by anybody then the conduct engaged in by the defendant alleged in paragraphs 9-16 of the statement of claim was misleading conduct and may be held to be conduct that contravened s 52 of the Trade Practices Act.
The conduct alleged in paragraphs 9-16 was the allegations of fact concerning the conduct of Mr Hannon on 22 July 2010. The only relevant conduct in paragraph 9 that is seriously contended for by the defendant is that Mr Hannon is alleged to have told the plaintiff that the defendant had decided to abolish his job and had abolished his job. The defendant’s defence is that the plaintiff was not told that his job was abolished at that time but that was something that would happen sometime in the future. I have already made a finding earlier in this judgment that I prefer the version of events put forward by Mr Hannon in this respect.
Properly read, the balance of the pleadings in paragraphs 9-16 does not ground any basis for an allegation of conduct that was misleading or deceptive. The defendant largely admits the allegations of fact contained in the paragraphs but contends for a different effect. It follows that I am not in a position to make any finding that there was any conduct which may be described as misleading or deceptive and therefore contrary to s 52 of the Trade Practices Act. It is therefore unnecessary to consider that matter further. If I am wrong about that matter, then my view is that the conduct did not occur in trade and commerce consistent with the principles enunciated in Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594, Martin v Tasmania Development and Resources (1999) 163 ALR 79 and Mulcahy v Hydro-Electric Commission (1998) 85 FCR 170. That finding renders it unnecessary for me to consider the defendant’s argument on s 53B of the Trade Practices Act.
In his pleading, the plaintiff makes a number of other claims and it is necessary that I address those in turn. The plaintiff makes claims for relief under ss 44, 119 and 545 of the FWA.
Section 44(1) of the FWA provides that an employer must not contravene the national employment standards. There is no contest between the parties that under s 61(3) of the FWA, divisions 3-12 of part 2-2 of the FWA comprise the national employment standards. Section 119(1) of the FWA is to be found within Part 2-2 of the FWA. Under that subsection, where an employee’s employment is terminated at the initiative of the employer because the employer no longer requires the job done by the employee to be done by anyone, then the employee is entitled to a redundancy payment. The terms of the subsection are not materially different from the defendant’s redundancy policy.
I have decided that the plaintiff’s employment was terminated following the acceptance by the plaintiff of the defendant’s repudiatory conduct. As a matter of law, this is to be characterised as a termination by the defendant. I will assume that this is the same as a termination at the initiation of the defendant. I have also decided that no redundancy of the plaintiff followed either under the terms of the contract of employment or as a matter of common law. It follows that the plaintiff’s employment was not terminated in the circumstances prescribed in s 119(1) of the FWA and no claim may be brought by the plaintiff under that subsection.
The plaintiff pleads an alternate claim under s 545 of the FWA. Under that section, a court is first required to be satisfied that the defendant has contravened a civil remedy provision and s 44(1) of the FWA is such a provision. If the court is so satisfied, the court may issue an order with injunction to prevent, or remedy the effects of that contravention. Alternatively, it may make an order for compensation or reinstate the person.
The plaintiff’s claim is that it is entitled to compensation for loss of a chance to seek to obtain orders under s 545 of the FWA in respect of his rights under s 119 of the FWA. As I have already described, this right is not claimable if there is no right under s 119 and as I have decided that issue adversely to the plaintiff, no remedy is available to the plaintiff under this head of claim. For the same reason, the plaintiff’s claim for redundancy under s 119 of the FWA made in paragraph 25 of the statement of claim is also dismissed.
Paragraph 26 of the statement of claim pleads that the plaintiff is entitled to a payment in lieu of notice. As I have decided that the employment agreement was terminated based upon the conduct of the defendant, then I am also satisfied that the plaintiff is entitled to a payment under clause 20(1) of the employment contract of the equivalent of an amount of one month’s pay. I am unable to accept the defendant’s submission that this entitlement is bound together with the question of redundancy. In my view, the plaintiff has a contractual entitlement to receive this payment.
Having made this finding, it is unnecessary for me to consider the plaintiff’s alternate claim by failing to provide five weeks’ pay in lieu of notice the defendant contravened ss 44 and 117 of the FWA.
In light of all of those reasons, it is appropriate that I hear the parties further in relation to consequential orders and costs.