Bladier v NSX Limited
[2010] VCC 581
•28 May 2010
| IN THE COUNTY COURT OF VICTORIA | Revised |
Not Restricted
AT MELBOURNE
CIVIL DIVISION
COMMERCIAL LIST
GENERAL DIVISION
Case No. CI-09-03854
| ROBERT BLADIER | Plaintiff |
| v | |
| NSX LIMITED | Defendant |
| (ACN 089 447 058) |
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| JUDGE: | HIS HONOUR JUDGE SHELTON |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 13 May 2010 |
| DATE OF RULING: | 28 May 2010 |
| CASE MAY BE CITED AS: | Bladier v NSX Limited |
| MEDIUM NEUTRAL CITATION: | [2010] VCC 0581 |
RULING
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Catchwords: EMPLOYMENT AGREEMENT– construing its terms – effect of probation period – Protean (Holdings) Ltd v American Home Assurance Co [1985] VR 187; Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99; Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales (1982) 149 CLR 337; Walker v Citigroup Global Markets Australia Pty Ltd (2006) 233 ALR 687.
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| APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr W L Friend | A J Macken & Co |
| For the Defendant | Mr I Green QC with | Aldgate Lawyers |
| Mr M Bromley | ||
| HIS HONOUR: |
1 This is a ruling on a no case submission made at the conclusion of the plaintiff’s case by Mr Green, one of Her Majesty’s Counsel, who, with Mr Bromley, appeared for the defendant. Mr Green indicated that he was making the submission “absolutely, not subject to an exercise of a discretion, et cetera”. I understand this to mean that he had elected not to call any evidence for the defence.
The Facts
2 These are largely not in contention.
3 The plaintiff is fifty-six years old. On 26 March 2009, he entered into an employment agreement with the defendant to act as its managing director (“the agreement”). It was common ground that the defendant’s engagement under the agreement commenced on 1 April 2009. The defendant was in effect, a second stock exchange, providing the same services as the Australian Stock Exchange but for smaller companies and on a smaller scale.
4 This proceeding largely turns on the construction of the agreement.
5 Prior to entering into the agreement, the plaintiff had spent many years in the financial industry, including ten years in a senior role at the Australian Stock Exchange. For two to three years prior to entering into the agreement, he had been performing consulting work for the defendant. In February 2008, he became a director of the defendant. Following a board meeting in May 2008, he was invited to become managing director of the defendant.
6 On or about 3 June 2008, the plaintiff, through his service company, Blatan Pty Ltd, commenced acting in the role of managing director of the defendant. He invoiced the defendant fortnightly for his services. The July 2008 newsletter of the defendant dated 22 June 2009 speaks in glowing terms of the new managing director:
“We are delighted to announce the appointment of Robert Bladier as the new Managing Director of NSX Limited, the company that operates the National Stock Exchange of Australia, the Bendigo Stock Exchange, the Water Exchange and the BSX Taxi Market.
Robert is a capital markets specialist, with more than 20 years experience in financial markets. He has extensive hands-on experience, including being head of derivatives for a large investment bank, leading strategy at the Australian Securities Exchange, and a management role in a registry services business. Robert also has considerable government and public policy experience.
As an investment banker, Robert managed a derivatives institutional sales desk, bringing him into contact with domestic and international fund managers on a daily basis, gaining an in depth understanding of funds management.
Robert headed strategic business development at ASX, with a focus on competition, new markets and positioning ASX as a commercial entity in a post-demutualisation environment. In this role, Robert instigated a body of industries, including an early focus on the mining industry.
He brings this experience to his new role as Managing Director of NSX, with a goal to building an exchange that delivers high quality service to its companies and works with them to build their success as part of major industry sectors.”
7 Negotiating the agreement took some little time. In fact, although the agreement is dated 26 March 2009, “2008” originally appeared in the agreement and was amended by hand to 2009. Also, Item 4 in Schedule 1 of the agreement provides: “Employment commencement: 3 June 2008”. These provisions are consistent with a lengthy negotiation period for the agreement.
8 On 25 May 2009, the plaintiff resigned as a director of the defendant. The Federal Court had fixed an extraordinary general meeting of the defendant for 28 May 2009. In a letter to the secretary of the defendant dated 25 May 2009 tendering his resignation, the plaintiff stated:
“I confirm that an EGM is to be held shortly calling for the removal of the
current board of directors of NSX Ltd.
With that in mind, current Directors have resolved to resign their respective Directorships.
In accordance with that resolution, I hereby resign my Directorship of
NSX Ltd.I welcome re-appointment to the Board if the Board so wishes at any time.”
9 On 2 June 2009, exactly twelve months after the plaintiff had been acting in the role of managing director of the defendant, either through his service company or under the agreement, the defendant, by notice in writing, terminated the plaintiff’s employment with it and paid the plaintiff one week’s pay in lieu of notice.
10 In this proceeding, the plaintiff claims it is entitled to twelve months’ payment plus ancillary benefits in lieu of notice pursuant to the agreement.
11 The relevant provisions of the agreement are:
“3 CONTRACT OF EMPLOYMENT 3.1 NSX agrees to employ the Executive in the Position, effective from the date set out in Item 4 of Schedule 1, on the terms and conditions set out in this Agreement.
. . . 5 PROBATION PERIOD
5.1 The Executive will be employed subject to the probationary
period set out in Item 3 of Schedule 1.5.2
Feedback concerning the Executive’s performance will be provided at a performance review undertaken prior to completion of the probationary period.
6 TERMS OF EMPLOYMENT The Executive is employed on a permanent basis and subject to this Agreement, his Employment shall continue for an indefinite period of time until terminated by either party providing notice as set out in Item 5 of Schedule 1, to the other party. Alternatively, NSX may pay to the Executive a payment (based on the Executive’s Remuneration) in lieu of notice.
. . . 10 REMUNERATION 10.1 NSX will provide to the Executive Remuneration comprising of:
(a) a salary; (b) superannuation; and (c)
reimbursement of insurance premium costs associated with death, total & permanent disability, trauma and income protection insurance covers held by the Executive;
(d)
incentive benefits payable pursuant to Clause 12.2; and
(e)
any fringe benefits taxation benefits provided for in Clause 10.5.
10.2 The items detailed in Clauses 10.1(a), 10.1(b) and 10.1(c)
are detailed in Item 6 of Schedule 1.
. . .
34 ENTIRE AGREEMENT
To the extent where permitted by law, in relation to the subject
matter of this Agreement, this Agreement:34.1 embodies the entire understanding between the parties, and constitutes the entire terms agreed on between the parties; and
34.2 supersedes any prior written or other agreement between the parties.
. . .
SCHEDULE 1
. . .
Item 3
Probation Period: 3 Months The period of probation takes into account the prior service of the Executive on a contractual basis.
Item 4 Employment Commencement: 3 June 2008
Item 5
Termination Notice:
At any time during the contract period, the Employment of the Executive may be terminated by:
(a)
The Executive giving NSX one Month’s notice in writing; or
(b)
NSX giving the Executive 12 Months’ notice in writing.
Item 6 Remuneration Components: Salary: AU$350,000 per annum Superannuation: In accordance with the Superannuation Guarantee (Administration) Act 2001, subject to the maximum superannuation contributions detailed therein.
Reimbursement of Privately Held Insurance Premiums: Premiums payable with regard to Australian Casualty and Life Policy Number 11389137 incorporating the following plans:
1. Life Protection Plan; 2. Recovery Protection Exec Plan; 3. Income Protection Premier Plan; as amended from time to time. Current
premiums outlined in Schedule 4.”
The Law
12 In Protean (Holdings) Ltd v American Home Assurance Co [1985] VR 187, at 240, Tadgell, J stated, at page 240, that “…the question of the sufficiency of
evidence upon a no case submission is whether there is any evidence that ought reasonably to satisfy the tribunal of fact that the facts sought to be
proved are established. …”.
13 The Australian edition of ‘Cross on Evidence’, at paragraph 11090, states the test, in similar fashion, as follows:
“Where an application is made for a verdict by a direction, it will succeed if there is no evidence on which a properly directed trier of fact would be entitled to find the material facts of the claim proved on the balance of probabilities.”
14 So far as construing the agreement is concerned, in Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99, at 109, Gibbs, J stated:
“It is trite law that the primary duty of a court in construing a written contract is to endeavour to discover the intention of the parties from the words of the instrument in which the contract is embodied. Of course the whole of the instrument has to be considered, since the meaning of any one part of it may be revealed by other parts, and the words of every clause must if possible be construed so as to render them all harmonious one with another. If the words used are unambiguous the court must give effect to them, notwithstanding that the result may appear capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something different. The court has no power to remake or amend a contract for the purpose of avoiding a result which is considered to be inconvenient or unjust. On the other hand, if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust, ‘even though the construction adopted is not the most obvious, or the most grammatically accurate’, … Further, it will be permissible to depart from the ordinary meaning of the words of one provision so far as is necessary to avoid an inconsistency between that provision and the rest of the instrument. Finally, the statement of Lord Wright in Hillas & Co. Ltd. v. Arcos Ltd. that the court should construe commercial contracts ‘fairly and broadly, without being too astute or subtle in finding defects’, should not, in my opinion, be understood as limited to documents drawn by businessmen for themselves and without legal assistance. …”
15 In Codelfa Construction Proprietary Limited v State Rail Authority of New South Wales (1982) 149 CLR 337, at 352, Mason, J stated:
“The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed.
It is here that a difficulty arises with respect to the evidence of prior negotiations. Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. To the extent to which they have this tendency they are admissible. But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself. The object of the parol evidence rule is to exclude them, the prior oral agreement of the parties being inadmissible in aid of construction, though admissible in an action for rectification.
Consequently when the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties’ presumed intention in this setting. We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract.”
16 In Walker v Citigroup Global Markets Australia Pty Ltd (2006) 233 ALR 687, the Full Court of the Federal Court stated, at 706:
“It is necessary to construe the contract as a whole and to construe individual clauses in that context. The objective is to give as much meaning as possible to all parts of the contract in a consistent fashion avoiding repugnancy and absurdity. Where there are clauses of a contract specially framed with the individual circumstances in mind, together with standard form clauses, it will normally be appropriate to give greater weight to the specially negotiated clauses. …”
Discussion
17 I turn to construe the agreement in accordance with the above principles.
18 The basic issue for my determination is whether the plaintiff, when his employment was terminated on 2 June 2009, was entitled to one week’s or twelve months’ pay in lieu of notice.
19 Mr Friend, who appeared for the plaintiff, relied upon the provisions of Clause 6 and Item 5 of Schedule 1 in support of his contention that the plaintiff was entitled to twelve months’ pay in lieu of notice. Mr Green contended that the plaintiff’s employment was terminated within the probation period of three months provided for in Clause 5 and Item 3 of the agreement and, that in keeping with the concept of a probation period, one week’s payment in lieu of notice was sufficient. Actually, he contended that there was no need for any notice or, alternatively, notice for the period of the unexpired portion of the probation period of three months, approximately one month, or at maximum there months’ notice. Mr Green submitted that the plaintiff’s approach would make Clause 5 and Item 3 superfluous if twelve months’ notice of termination was required during the probationary period.
20 Mr Friend, by way of response, stressed that the plaintiff relied upon the wording of Item 5 which did not differentiate between notice required during the probationary period and after it. Given the express wording of the agreement, he submitted:
•
that there was no need to imply a term that there was no, or a shorter, notice period during the probation period;
•
that this was consistent with Item 4 showing the commencement of employment at 3 June 2008 and provision for a probation period of three months;
•
that the reference in Item 3 to the prior service of the plaintiff on a contractual basis referred to his acting as a consultant to the defendant prior to 3 June 2008;
•
that Item 3 indicated that but for this consultancy period, the probation period might have been longer;
•
that it would have been absurd to require the plaintiff when he entered into the agreement on 26 March 2009 to be required to serve a probation period since he had already been acting in the role of managing director for ten months;
•
that the probation period had already expired when the agreement was entered into, having expired at the expiration of three months after 3 June 2008.
21 Mr Green responded that the proper interpretation of Item 3 of Schedule 1 was that but for the period after 3 June 2008 when the plaintiff was employed as managing director through Blatan Pty Ltd, the probation period would have been longer.
22 The construction of the contract contended for by Mr Green requires me to imply terms into the agreement, despite the provisions of Clause 34. The construction contended for by Mr Friend, on the other hand, requires me to give effect to Item 5 of Schedule 1. It is, as submitted by Mr Friend, consistent with the other provisions of the agreement, and particularly Schedule 1.
23 Taking all the above matters into account, particularly those referred to in the preceding paragraph, the construction of the agreement contended for on behalf of the plaintiff is, in my view, clearly to be preferred.
Conclusion
24 The defendant does have a case to answer. Submissions on the no case submission were made, it appeared to me, on the basis that they were final submissions with respect to the proceeding as a whole. I understand that quantum is not in dispute. Subject, of course, to any further submissions that the parties wish to make, I would be prepared to enter judgment for the agreed quantum.
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