Clarke v Pacific National Services Pty Ltd

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FEDERAL COURT OF AUSTRALIA

Clarke v Pacific National Services Pty Ltd [2023] FCA 699

File number: NSD 1327 of 2021
Judgment of: KATZMANN J
Date of judgment: 27 June 2023
Catchwords:

CONTRACT – where respondent employer sought binding expressions of interest in voluntary redundancy – where applicants returned signed expressions of interest in voluntary redundancy – whether binding contract created

CONTRACT – where correspondence constituting contract stated that termination of employment would not occur until employees were notified that their roles actually became redundant – where correspondence also stated that latest date for redundancy was 31 December 2021 – whether agreement subject to a condition precedent that employees be no longer required to perform work within the scope of their skills, expertise and qualifications

Legislation:

Fair Work Act 2009 (Cth) ss 12, 61(2), 90(2), 117, 543, 570

Heydon JD, Heydon on Contract: The General Part (LawBook Co, 2019)

Seddon NC and Bigwood RA, Cheshire & Fifoot Law of Contract (11th ed, LexisNexis Butterworths, 2017)
Cases cited:

Amalgamated Collieries of WA Ltd v True (1938) 59 CLR 417

Australian Woollen Mills Pty Ltd v The Commonwealth (1954) 92 CLR 424

Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd (2001) 117 FCR 424

Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256

Currie v Misa (1875) LR 10 Exch 153

Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] AC 847

Edwards v Skyways Ltd [1964] 1 WLR 349; [1964] 1 All ER 494

Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95

Goodman Fielder Consumer Foods Ltd v Cospack International Pty Ltd [2004] NSWSC 704

Helmos Enterprises Pty Ltd v Jaylor Pty Ltd [2005] NSWCA 235; 12 BPR 23,021; Aust Contract Reports ¶90-215

Joseph v Parnell Corporate Services Pty Ltd (2021) 284 FCR 546

Lacson v Australian Postal Corporation (2019) 268 FCR 314

Meehan v Jones (1982) 149 CLR 571

O’Grady v Northern Queensland Co Ltd (1990) 169 CLR 356

Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537

RA Brierley Investments Ltd v Landmark Corporation Ltd (1966) 120 CLR 224

Redundancy Case (2004) 129 IR 155

Rinehart v Hancock Prospecting Pty Ltd (2019) 267 CLR 514

Rudge v Secretary, Department of Customer Service [2020] NSWSC 1422; 300 IR 92

Ryan v Textile, Clothing & Footwear Union of Australia [1996] 2 VR 235

Searle v Commonwealth of Australia (2019) 100 NSWLR 55

Shahid v Australasian College of Dermatologists (2008) 168 FCR 46

Stevens v Spotless Management Services Pty Ltd [2016] VSCA 299

Taylor v Johnson (1983) 151 CLR 422

Termination, Change and Redundancy Case (1984) 8 IR 34

Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165

Visscher v Giudice (2009) 239 CLR 361

Wollongong Coal Ltd v Gujarat NRE India Pty Ltd (2019) 100 NSWLR 432

Workers’ Compensation Board of Queensland v Technical Products Pty Ltd (1988) 165 CLR 642
Division: Fair Work Division
Registry: New South Wales
National Practice Area: Employment and…
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Details
Case
[2023] FCA 699
Decision Date

CaseChat Overview and Summary

In the matter of Clarke v Pacific National Services Pty Ltd, the applicants sought to enforce safety net contractual entitlements to redundancy pay and leave entitlements on termination of their employment, or alternatively, damages for breach of contract. The respondents, Pacific National Services Pty Ltd, denied liability on the basis that the applicants had not provided valuable consideration for the contracts they claimed had been formed. The applicants contended that they had provided valuable consideration by promising to accept the termination of their contracts of employment on or before 31 December 2021 without dispute or demur.

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

Clause A31 provides for notification and a process of consultation where Pacific National has made “a definite decision that it intends to proceed with any significant change, or proposes to introduce a change to the regular roster or ordinary hours of work”. Paragraph A31.1(i) provides that, after the consultation process has concluded, Pacific National “may implement change after a further fourteen (14) days”.The relevant facts Most of the relevant facts were agreed. On 23 April 2020, Pacific National wrote to all its employees at the Werris Creek depot informing them that it had made a “definite decision” to reduce the number of roles based at that depot and, pursuant to para A31.1(c) of the Enterprise Agreement, it would be undertaking a consultation process. Pacific National wrote again to its employees at Werris Creek on 22 May 2020, 27 May 2020, 8 July 2020 and 13 August 2020 updating them on the consultation and implementation process and inviting them to submit non-binding expressions of interest for alternative roles, job swaps and/or voluntary redundancy. Each of the applicants submitted to Pacific National a non-binding expression of interest in voluntary redundancy. On or around 11 September 2020 Pacific National wrote to each of the applicants (the 11 September letters) inviting them to make a binding expression of interest in voluntary redundancy and provided a form by which to do so (the binding EOI form). The salient parts of the letters read as follows:Further to our recent communications regarding operational changes in North West NSW, Pacific National can confirm that it may be forced to move to redundancies at Werris Creek due to the level of interest expressed in alternate roles in the region. We also acknowledge receipt of your non-binding Expression of Interest for Voluntary Redundancy (EOI).As your initial EOI was non-binding, we would like to confirm that you are still interested in the potential option of a Voluntary Redundancy. To do this, please complete the attached form …Please be aware that even if you confirm your EOI, there is no guarantee that your position…will be made redundant. Pacific National retains the right to accept or reject applications for voluntary redundancy at its discretion.In conjunction with making decisions regarding the EOIs, we also need to confirm we have adequate resourcing in the Coal depots in the region… and the Bulk NSW depots to meet the current and expected demand in the North West, including for the upcoming grain season. These resourcing issues will affect the termination dates of those employees whose EOIs are accepted.A severance calculation estimate outlining your final payments as per the Pacific National Bulk Rail NSW Enterprise Agreement 2018 will be provided, if requested, once we receive your binding EOI nomination. Again, please note that this does not represent an acceptance of your EOI and you must not assume that your role will be made redundant until Pacific National has notified you that your application has been accepted. If you are one of the candidates for redundancy, we will also provide you with the date your employment is expected to terminate at this time.(Emphasis added.)

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

It follows that, if, as I have concluded, the parties did enter into binding contracts when Pacific National sent the 1 October letters, it did not breach its obligations under the contracts. In these circumstances the final question regarding repudiation does not arise.Conclusion The application filed on 17 December 2021 must be dismissed. Pacific National did not seek an order for costs in the event that it was successful. Having regard to the fact that the application sought an order under s 543 of the FW Act to enforce safety net contractual entitlements to redundancy pay and leave entitlements on termination, this is a proceeding “in relation to a matter arising under [the FW Act]” within the meaning of that expression in s 570, notwithstanding that the case was essentially fought on the alternative basis that the applicants were entitled to damages for breach of contract See, for example, Joseph v Parnell Corporate Services Pty Ltd (2021) 284 FCR 546 at [116]–[121] (Logan, Katzmann and Snaden JJ). Section 570 only gives the Court the power to order one party to pay another party’s costs in limited circumstances. In the absence of any submission that any of those circumstances apply in this case, there should be no order as to costs.

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.