FEDERAL COURT OF AUSTRALIA
Clarke v Pacific National Services Pty Ltd [2023] FCA 699
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- Case
- [2023] FCA 699
- Decision Date
CaseChat Overview and Summary
The primary legal issue before the court was whether the parties had entered into binding contracts when Pacific National sent the 1 October letters, which stated that the applicants' offers to take voluntary redundancy had been accepted, and that each applicant would be made redundant by notice issued at some future date. The court had to determine whether the applicants had provided valuable consideration for the contracts they claimed had been formed. The court also had to consider whether the agreement was subject to a condition precedent that employees be no longer required to perform work within the scope of their skills, expertise and qualifications.
The court held that the parties had entered into binding contracts when Pacific National sent the 1 October letters, which accepted the applicants' offers to take voluntary redundancy and provided for their termination of employment by notice at some future date. The court found that the applicants had provided valuable consideration for the contracts by promising to accept the termination of their contracts of employment on or before 31 December 2021 without dispute or demur. The court held that the agreement was not subject to a condition precedent that employees be no longer required to perform work within the scope of their skills, expertise and qualifications. The court concluded that, if the parties had entered into binding contracts, Pacific National did not breach its obligations under the contracts, and therefore, the final question regarding repudiation did not arise.
The court dismissed the proceeding and made no order as to costs.
Orders
Orders of the court
1. The proceeding be dismissed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
In the 1 October letters, Pacific National stated that it had accepted the applicants’ offers to take voluntary redundancy, that each applicant would be made redundant by notice issued at some future date, and that each applicant would be entitled to severance payments in accordance with the Enterprise Agreement. These were not new terms when the 1 October letters were issued. Properly understood, Pacific National’s reference to 31 December 2021 as the latest date they would be made redundant was not an attempt to introduce a new term but the provision of the date by which their employment was expected to terminate, as foreshadowed in the 1 September letters.Did the applicants provide valuable consideration to Pacific National? Consideration has been defined as the act or promise provided by one party as the price of the other’s promise. The rule is that consideration must move from the promisee. Thus, in an action for breach of a contractual promise made by a respondent (the promisor), the applicant (the promisee) must show that the relevant promise is part of a bargain to which he or she (the applicant) has contributed. See Cheshire & Fifoot at [4.2]–[4.6]. Consideration for this purpose may come in a variety of forms. In Currie v Misa (1875) LR 10 Exch 153 at 162, Lush J said:A valuable consideration, in the sense of the law, may consist either in some right, interest, profit, or benefit accruing to the one party, or some forbearance, detriment, loss or responsibility, given, suffered or undertaken by the other…See also Searle v Commonwealth of Australia (2019) 100 NSWLR 55 at [161] per Bell P (Bathurst CJ and Basten JA agreeing at [1] and [246] respectively). In Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 at 271 Bowen LJ accepted the following definition of consideration:Any act of the plaintiff from which the defendant derives a benefit or advantage, or any labour, detriment, or inconvenience sustained by the plaintiff, provided such act is performed or such inconvenience suffered by the plaintiff, with the consent, either express or implied, of the defendant. Here, the applicants submitted that they provided valuable consideration in that, in exchange for severance pay, they promised to accept the termination of their contracts of employment on or before 31 December 2021 without dispute or demur. In the event of a dispute, they argued, Pacific National could hold the applicants to their promises. This agreement was said to bring obvious benefits to Pacific National, in the form of avoiding restrictions on its ability to select employees for redundancy contained in the Enterprise Agreement and potential challenges to its decision to make employees redundant and/or the selection of employees for redundancy which might otherwise be the subject of a dispute in the Fair Work Commission. Clause A32.2 of the Enterprise Agreement, for example, contains a process for dispute resolution in which a matter may ultimately be referred to the Commission for conciliation, and cl A31.3 and cl A31.4 respectively confer a right on employees to commence conciliation or arbitration in the Commission in relation to breaches of consultation requirements.