Commonwealth Bank of Australia v Barker

[2014] HCATrans 73

[2014] HCATrans 073

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Adelaide  No A1 of 2014

B e t w e e n -

COMMONWEALTH BANK OF AUSTRALIA (ACN 123 123 124)

Appellant

and

STEPHEN JOHN BARKER

Respondent

FRENCH CJ
KIEFEL J
BELL J
GAGELER J
KEANE J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON TUESDAY, 8 APRIL 2014, AT 10.15 AM

Copyright in the High Court of Australia

MR B.W. WALKER, SC:   May it please the Court, I appear with my learned friend, MR C.D. BLEBY, SC, for the appellant.  (instructed by Minter Ellison Lawyers)

MR R.C. KENZIE, QC:   If it please the Court, I appear with my learned friends, MR P.A. HEYWOOD‑SMITH, QC, MR S.J. MITCHELL and MR M.A. IRVING, for the respondent.  (instructed by Pace Lawyers)

FRENCH CJ:   Yes, Mr Walker.

MR WALKER:   May it please the Court.  Your Honours, the implied term which was held to exist by majority in the Full Court of the Federal Court in these proceedings has not been the subject of any such holding in this Court.  It follows, of course, that neither have the consequential questions that we note in paragraphs 2 and 3 of our – I should say the second and third of the issues that we raise in paragraphs 3 and 4 of our written submissions have not been the subject of decision in this Court.

In a nutshell, in our submission, the error by the majority below was to depart from the orthodox means by which a term could be implied.  At the outset we need to point out, not least because of the notice of contention filed by our friends, that there are two of the perhaps three methods of implying a term into a contract which are in question in this case.  The third to which I have made fleeting reference and will make no more reference is by what might be compendiously called “custom”.

The first or primary way in which the matter has been considered in the courts below and is the burden of – the bulk of the arguments in writing before your Honours concerns that form of implication which is known as implication by law.  I will come to this Court’s approach to that matter very shortly.  The second is variously named implication in or as a matter of fact, or implication ad hoc.  The principal difference between the two, as your Honours well appreciate, is that the first is generic or by class and the second is for a particular contract in the circumstances in which it is made.

Having said that, as if it were a clear distinguishing feature, of course, as the authorities themselves have noted, there are cases where there are reasons to see a lack of clarity, a fuzziness to the distinction between the classes, and there are historical reasons for that, to which I am about to come.

In our submission, they also have this in common, though it may be more verbal than substantive, that is, both are said to be triggered by, made out by, satisfaction of a so‑called test of necessity and though the word “necessity” is to be found in all the authorities and discussions for each of those modes of implication, it seems clear that not least because of the generic as opposed to particular aspect of those different forms of implication, “necessity” has a somewhat different guise in the former from the latter.

However, in our submission, it is clear from the authorities in this Court and also clear from the principles to which they refer and upon which they must be based that something in the nature of necessity, and conveniently and appropriately using the word “necessity”, that must inform implication as a matter of law. 

In our submission, the Full Court departed signally from that, radically from that, in the approach they took in matters to which we will come after we have been to the orthodox doctrine in this Court.  In particular, regard was had and a lead was perceived as available from a number of disparate authorities in this country based in turn - those in support of the so‑called implied term - based in turn on a number, also disparate, of decisions in England and Wales. 

As your Honours have seen from our written submission and, again, in a nutshell, it is our submission that the reason there is error that ought to be corrected below is that following that English lead is following a lead which is radically different in principle from the necessity‑based approach which is the law in this country.  In particular, the English approach can be seen to be based in a way which is not always clearly, at least, at the time it was first adumbrated, to be understood in terms which are recognisable as a common law implication as a matter of law.

FRENCH CJ:   Before we go further into the question of the implication, could I ask whether there was any consideration at any level of the range of the class of employment contract to which the implication is applied, because the notion of what constitutes an employment contract, as you know, has shifted and I have in mind the kind of multifactorial test referred to in cases like Hollis v Vabu Pty Ltd (2001) 207 CLR 21.

MR WALKER:   The short answer is no.  Now, that is not to say that the reasoning in the courts below can be seen to have embraced in any fully explained way that this is a term that is by law implied into each and every contract which can be called a contract of employment.  I cannot say that, although it would obviously be a powerful criticism if without explanation that is the result.  It seems to be that that is the result of this decision, though no doubt if it were to stand uncorrected by this Court, later attempts to apply the Full Court’s reasoning would involve an attempt to extrapolate what the class or genus of the contract is, to which this implied term applies.  That has not been done.

FRENCH CJ:   The contract we are dealing with in a sense is easy.  It sits at the centre of what we would call an employment contract.

MR WALKER:   Quite.

FRENCH CJ:   But out at the boundaries there is a lot of grey.

MR WALKER:   Yes.  Now, we call that vagueness in aid, and that is vagueness at several levels, not only as to the content in application of this term, particularly in that phase of a contract which is its termination phase, particularly in a contract where there may be termination without cause mutually on notice, even more particularly where the employer may terminate without cause on notice, but dispensing with a capacity to dispense with notice upon proffer of payment.

Now, I will come back to those aspects of the Full Court’s decision, but for the present our answer to the Chief Justice is, no, there is not a consideration of how one may classify or categorise or characterise arguably different kinds of employment contracts for the purposes of testing whether the implication of this term is appropriate.  The most that can be said in favour of the decision below in that regard is that they had a particular contract before them and for whatever class, however expressed to which that contract applied, the decision stands.

Your Honours, the English approach, again by way of opening description is one which, in our submission, particularly can be seen to be affected, indeed, arguably infected, by a very special reference to, and relevance of, United Kingdom statutory regulation of, among other things, so‑called unfair dismissal.  The later authorities in the United Kingdom, to which we will come, contain an explanation retrospectively of how the so‑called implied term came into existence, which we will attempt to show your Honours is quite at odds, radically different from what the jurisprudential theory in this country would see as the requisite necessity test.

Against that opening background, may I take your Honours quite directly to a couple of passages in authorities in this Court?  There is no challenge indicated either by any of the argument below or in the argument in this Court to any of this authority.  We do not suggest for a moment that there is anything abstruse or arcane about these matters.

May I start with a passage familiar to your Honours in Byrne v Australian Airlines 185 CLR 410 at 422 to 423? In the reasons of the plurality Chief Justice Brennan and Justices Dawson and Toohey under the subheading “Implied term”, none of which I will read, extending over onto the top of the next page up to the next subheading, there is a passage which it must be said more closely resembles a discussion of the ad hoc or factual implied term, a term implied by law. However, in the embedded quotation from Hawkins v Clayton of Mr Justice Deane at about point 8 on page 422, one sees a statement which it may well be, with respect, is as appropriate for implication by law as implication by fact.

However, notwithstanding that observation about how the plurality saw the matter in Byrne, on page 423 at the end of the passage I have drawn to attention, there is reasoning in the three sentences, the first of which commences with the word “Plainly” about an inch from the top.  Again, I will not read it.  That is a passage which, in our submission, is a valuable indication that the concept of necessity is tied or must be based on, and must be deployed in relation to, the operation of the contract, rather than as a means by which the contract can be itself transformed into something which is, as it were, more socially desirable or more favourable to one party or another.

Could I then go to the reasons of Justices McHugh and Gummow in the same authority?  At 440 their Honours turn generally to the subject of implied term starting with the possibility of custom, upon which I will not dwell.  At 441 under the subheading of “Business efficacy” what might be called the Moorcock or factual or ad hoc implication is discussed, and in passing may I draw to attention some of the considerations that their Honours regarded as important in that employment case, Byrne, in ruling against the putative implied term with respect to procedures for dismissal.  At the foot of page 442, over to the top of page 443, there is a reference by way of objection to the implication to operation in what is called “a partisan fashion”.

On page 443 at about point 7 or thereabouts in the paragraph containing reference to Ridge v Baldwin there is the reference to the New Zealand authority which their Honours describe, being an authority from 1985.  Their Honours note that the New Zealand Court of Appeal talked of the common law – that:

the common law “may come to recognise” a duty” –

and as their Honours said, such comment did “not take matters very far”.

Could I then take your Honours finally in relation to the discussion by Justices McHugh and Gummow of the ad hoc or factual implication to page 446 where there is a conventional, with great respect, statement of the necessity test in the paragraph towards the foot of the page commencing “Nor could it said”.

There then commences at page 447 in the discussion by their Honours under the heading “Implications independent of intention” what might be called the class or category or implication by law approach and we point, in particular, at page 448 to the approving citation from the reasons of Justice Hope in Castlemaine Tooheys 10 NSWLR 468 at 487. I will come back to that in just one moment.

Staying with Justices McHugh and Gummow, the discussion which then ensues over to the top of page 453, not all of which, of course, I will read, includes the approach to this class or category of contract which one sees on page 449 in the paragraph commencing with the phrase “However, the more modern and better view”.

Their Honours note what they saw as force in the suggestion that what now could be classified as terms implied by law in particular classes of case had their origins as implications based on the intention of the parties, and I interpolate that is why one might say that historically, implication by law and implication by fact are plainly related and may not always be clearly distinguishable.  Then picking up their Honours again:

but thereafter became so much a part of the common understanding as to be imported into all transactions of the particular description.

Now, much lies in those last words, of course.  What is the particular description, what is the level of generality, what are the defining or typical characteristics in question?  But, leaving that just to one side for one moment and looking at the substance of the matter, in our submission, that is part of an understanding of what might be called the necessity test as applied to implication by law, and one sees that it is, as it were, reflected or manifested in, for those class of contracts, the term becoming:

so much a part of the common understanding as to be imported into all transactions of the particular description.

Now, one thing can be said about the English position, as well as the Australian position, at all relevant times, and that is that there is nothing that can be observed in the case law, nor for that matter in any of the relevant scholarship, which comes anywhere near that acceptance of such a term becoming “so much a part of the common understanding as to be imported into all transactions of the particular description”.  That is a description of a judicial technique which, as it were, recognises a phenomenon rather than creating one.

On page 450, in the middle of the page, their Honours use terms which are commonly used to explain the notion of necessity in this context, in the paragraph commencing “Many of the terms”.  Your Honours, I draw to attention in particular, the notion of the:

enjoyment of the rights conferred by the contract –

I stress, “conferred by the contract” -

would or could be rendered nugatory, worthless, or perhaps, be seriously undermined.

The “perhaps”, with great respect, is an indication that this is a rule of necessity and serious undermining “perhaps” may not achieve satisfaction of that test; certainly “nugatory” and “worthless” would.  Then their Honours summarise that:

Hence, the reference in the decisions to “necessity”.

Their Honours, two paragraphs down, describe that as being:

crucial in the modern cases in which the courts have implied for the first time a new term as a matter of law.

Their Honours then turn, on pages 451 and 452 to the top of 453, to a discussion of what falls out from some English cases of a kind which, in our submission, gets scanty if any real consideration in the English authorities that have been relied upon for the implication of the term which brings us to this Court. 

In particular, your Honours will be familiar with the facts of Irwin, the modern - well, not so modern phenomenon, it occurred in Ancient Rome - but the building of residences in the air, so you own strata, to which of course you must climb, or be carried, has a certain necessity about it in terms of enjoying it as a residence.  This is an almost paradigm example of how one applies the notion of necessity.  One does not engage in fantasy about being parachuted into your living room, it is obviously a species of what might be called reasonable necessity.

Lord Wilberforce, in the passage quoted on page 451, was able to say about the easements necessary, not only to be available but also to be kept available by maintenance, to get to those high rise council dwellings:

they are essentials of the tenancy without which life in the dwellings, as a tenant, is not possible.

language which, with all due weight given to practicalities rather than theoretical fantasy, which is language of necessity as the law understands it.  There is then reference to another decision that your Honours will see referred to throughout not only the party’s submissions here but the decisions below, and that is Scally, which turned upon the somewhat striking context of parties to a contract having become parties to that contract in terms of which they were not aware, by reason of the trade union representation through which the contract had been made.

Now, for some reason or other, which I cannot explain to your Honours, Scally does not include the question, which presumably never occurred to the trade union, that perhaps the remedy for the parties in that case was against the agent who had not communicated the term of the contract as negotiated. 

However, the issue in the case in Scally was whether there was an implied term that the party who would benefit from the ignorance of a particular provision available to the doctors in that case, whether there was an implied term requiring communication of that benefit to the possibly involved parties.  Again, one can see how the concept of necessity informed the decision.  Unless you knew about something you could never avail yourself of it, it would be rendered worthless or nugatory.

Then in the middle of page 452, Justices McHugh and Gummow, having noted those approaches, posed the relevant question, quoting from Scally, as:

Was the term a “necessary incident of a definable category of contractual relationship”?

They held that:

where a contract of employment, negotiated between employers . . . there was an implied obligation on the employer to take reasonable steps to publicise the term -

my words, not theirs, obviously otherwise the worth of that term would be zero to those who knew nothing of it in time.  Then their Honours turn back to the case of the allegedly delinquent airline employees in Byrne itself.  They relied upon this concept of necessity.  They said:

employment contracts were a well‑recognised “class” of contract -

that general.  That was conceded, so also was the proposition that:

law imported various incidents into the relationship of employment, one of them being the entitlement of the employer to terminate the employment at will on giving reasonable notice and to dismiss summarily for misconduct.

Now, we interpolate that if those are, at least concededly, as noted in that passage of argument, implications by law, it would be odd if another implication of law in some way rivalled or entrenched upon them.  Nothing has ever been observed in the case law or, for that matter, commercial practice to which a court might turn in order to understand what has become accepted as a matter of common understanding is necessary in all such cases to that effect.

Their Honours then continued:

However, there is no “necessity” for such a step in the sense in which that term was applied in cases as Irwin and Scally.  The contract of employment is not, from the viewpoint of the employee, rendered nugatory if the existing provisions thereof remain, as a matter of contract, to operate concurrently with the regime established by the Award and deriving its authority from statute.

There is no necessity for the contract to borrow from the statute or from an award given force by the statute.  Now that is an important observation when one considers the rather crabwise and indirect route by which in England a similar term has apparently been recognised ‑ I say apparently because of the observations to which I am going to come soon, in England itself.  The difference in particular is that in this country for reasons which, which great respect, appear to be solidly based in common sense, it is difficult to say that there is a necessity for a contract to include a term conveying a benefit which is already available as a matter of statute.  That seems to be the antithesis of necessity.  Your Honours ‑ ‑ ‑

FRENCH CJ:   I suppose the more broadly framed the implication, the greater the difficulty of justifying it by reference to necessity.

MR WALKER:   Yes, quite so, and one see the two examples of the conceded implications by law for contracts of employment:  summary dismissal for misconduct, so the term goes no broader than what I might call, the mischief, it being unthinkable to anybody that you must keep a misconducting person on; and termination on reasonable notice, where the word “reasonable” surely answers the question both as to necessity and as to in accordance with general policy, and it goes no further than the exigency of preventing what might be called lifetime or perpetual employment.

FRENCH CJ:   How does the implication found here differ from an implication of good faith?  Is that a subset or is it just a manifestation?

MR WALKER:   It is impossible to see from the reasons below, any factor which would distinguish the supposed implied term in this case from something as broad as a notion of good faith.  The next thing I say is this.  It is difficult with broad notions of good faith, when one is talking only through the contractual prism, putting aside other sources of that obligation ‑ it is difficult not to test the matter by turning it into its negative, that is, the obligation to behave in good faith is rather easily stated as an obligation not in effect to be dishonest; that is, to act in bad faith.  If there is any other zone or scope of conduct controlled by an obligation of good faith, apart from that negative obligation, it is quite impossible to see it articulated in any relevant authority.

Now, I stress I am leaving aside those things which are almost traditionally sui generis such as uberrimae fidei in insurance policies.  I am not saying that is not contractual, but it is so special in its history and place that perhaps it deserves to be looked at sui generis.

FRENCH CJ:   Good faith may import a positive obligation to act conscientiously, diligently in the discharge of the obligations ‑ ‑ ‑

MR WALKER:   Yes.

FRENCH CJ:   ‑ ‑ ‑ the exercise of the powers and discretions that are conferred, not just an obligation not to be dishonest.

MR WALKER:   Yes, but if I can put it thus.  You have still got to be careful as to whether one has simply invented some formless mass under the title of being obliged to be obliging, that one must go out of one’s way.  Now, I use that language because this is all about a contract.  These terms are putatively part of a contract.  In a sense they subserve ‑ I do not mean in a subordinate fashion, but they subserve or arise because of the content of the express terms and the other implied terms, including inferred terms or matters which appear as a matter of interpretation.  That is the construct which in contest is being served or not by dent of the test of necessity by the putative implied term.

Now, if it is just good faith, then, in our submission, it is very difficult to see how it can detract from what I am going to call the definitional limits of obligation found in the express terms.  So, for example, if there is an obligation to do something within 10 days, and what I might call social decency would propose it could be done within two days to the decided advantage of the other party to the contract, good faith would not, in our submission, step in, assuming it was an implied term, to put the party in breach of the obligation for taking three days, well within the 10 but outside the two.

It is for those reasons, in our submission, that, to pick up a comment the Chief Justice made earlier, the greater the generality, the broader the extent of the supposed obligation imposed by the implied term, and the more it is approaching what might be called a generalised attitude of benevolence by one party to the other, then, in our submission, the more difficult it is to see what work it does in relation to any of the express terms.  It cannot contradict any of them, it cannot qualify any of them, it does not cut any of them down, and one asks, with respect, apart from the negative obligation not to be dishonest, which is not only contractual but in many cases will also be tortious, it is difficult to see what place it has to play as a matter of necessity.  That, with respect, is really what Justices McHugh and Gummow were pointing out in their culminating passage to which I have just drawn attention.

Your Honours, very briefly and without dwelling on it, you will have seen from our written submissions that we have drawn to attention a similar passage which contains, we submit with respect, some equally useful language to advance the relevant concepts.  That is Breen v Williams 186 CLR 71. The passage we have drawn to attention and which I will take your Honours to now is at 102 to 103 in the reasons of Justices Gaudron and McHugh. Of course, this is the case about the medical records, the obligation or not between doctor and patient. At the foot of page 102 in a passage I will not read commencing “The common law draws a distinction”, your Honours see familiar matters. Could I draw to attention the collection of various expressions that their Honours set out on the first half of page 103? Some I have already drawn to attention; others are to similar effect.

Your Honours, it is not suggested by our learned friends for the respondent that there is anything wrong in the description of the common law contained in those passages or that they do not represent the common law in Australia.  It bound the Full Court and, in our submission, it should have led the Full Court to reject the approach taken in England. 

Before going to what the Full Court did, may I, as I said I would, take your Honours briefly to a passage in Castlemaine Tooheys v Carlton and United Breweries (1987) 10 NSWLR 468. The passage I wanted to draw to attention, which includes that which was quoted in Byrne, commences at the foot of page 486 in the reasons of Mr Justice Hope that were agreed in by Justices Samuels and Priestley and under that heading “Implications of terms by law and otherwise” at letter F on that page there is a discussion which again is in familiar terms.  At page 487 just above letter D, one sees a reference to the typical classes for such implication including:

contracts between master and servant –

and then his Honour says - it might be described, with respect, as a masterly understatement - at the end of that paragraph just after letter D -

the difficult question is to determine what test should be applied before the courts imply such a term for the first time.

I will not read what follows but, with great respect, we urge the continued cogency of the considerations set out by his Honour as various possibilities are canvassed.  Can I, as it were, bring it to ground in a way which favours our argument at page 489 between C and D, in the passage commencing with the phrase:

The most common ground accepted in this decision as the basis for implication by law was that stated by Bowen LJ in Miller v Hancock, that the term was one which “the parties . . . must have intended by necessary implication, as a basis without which the whole transaction would be futile”.

The test so stated seems to be properly reflected in Lord Wilberforce’s one word test – necessity.

In our submission, as one can see from the reference to those reasons in this Court, that ought to be regarded as an authoritative and helpful source of guidance as to the test that has to be applied to answer what may well be but nonetheless has to be answered, the difficult question of implying for the first time.  None of that process applying the test of necessity was done by the Full Court in this case. 

May I take your Honours - it is reproduced in volume 2 of the appeal book, its citation is 214 FCR 450 - to the reasons of the majority. They start in the appeal book at page 470. If your Honours will permit me I will use the Federal Court references from now. Could I take you first to FCR 450 – I am sorry, to FCR 463 ‑ ‑ ‑

FRENCH CJ:   It does assist those of using electronic records to give us the appeal book page as well.

MR WALKER:   I will do that entirely, your Honours.

FRENCH CJ:   Thank you.

MR WALKER:   I am sorry, whatever is convenient.  Page 483 appeal book.  This relevant part I want to take you to starts under the subheading “Term implied by Law?” preceding paragraph 88.  One sees a reference to the University of Western Australia v Gray.  That will be picked up later in a way that is of some significance.  At the foot of page 483 appeal book, in paragraph 93 of the decision their Honours note the recognition of necessity as “central to the rationale”. 

They go on to say that is where the difficulty arises, and there is a reference to what “the Full Court pointed out in Gray”, namely, “necessity is an elusive concept”.  May we interpolate to say not ultimately elusive, sufficiently understood both to be named and to be used, and on the highest of authority, said to be the recourse required in such cases.  It might be difficult in borderline cases.  It may involve judgments in the nature of evaluative assessment.  So be it. 

There is a reference to policy considerations.  It is, of course, to be borne in mind that policy considerations cut both ways, that so‑called policy considerations are as often, perhaps more often, used to put an end to the so‑called implication by necessity of particular putative terms rather than promoting it.

KIEFEL J:   Do their Honours anywhere identify what policy considerations they had in mind?

MR WALKER:   By implication I think I should say, perhaps, I am going to try and persuade your Honours, no, not in reality, but there is a passage I am about to come to which I concede may involve, properly understood, a kind of policy.  It is between the lines, I will come to it in just one moment.  In paragraph 94 one sees a reference to what the Full Court in McDonald, that is the Full Court of the Supreme Court of South Australia in McDonald, had observed about England, which is the body of case law to which I will be coming fairly soon, and one sees at about the third‑last line of that paragraph 94 a reference to matters being:

all informed by policy considerations referable to the nature of the relationship –

One does not find, with respect, apart from what we will call circular assertion, if you like, conclusion assuming, one will not find in the English case law a discussion of those so‑called policy considerations seen through the prism of necessity, necessity in aid of the contract. 

Now, in paragraph 95, and your Honours will have seen we have picked this up in our written submissions, one sees that for the majority in the court below it was something in the nature of a consistency that was cardinal to the reasoning.  In our submission that is a falling away from the rigor required by necessity.  There is a reference to:

the development of the implied term is consistent –

with what is called “the contemporary view of the employment relationship”.  The difficulty with the reversion to what might be regarded as being in substance a use of the passive voice here is, whose view, and on the basis of what materials, and with what level of what might be called virtual unanimity, so as to achieve an “it is accepted on all sides” culmination, which is surely the threshold that has to be crossed to satisfy the test of necessity, and there will not be answers to any of those questions in any of this material.  Now, paragraph 95 concludes with a reference to what their Honours call:

the explanation of the explanation of the necessity test stated . . . in Gray.

We will deal with that briskly as follows.  There is no explanation of the necessity test found in Gray.  There are, with respect, interesting questions raised about it.  There is an avowed acceptance of the authority of this Court, binding on all other courts including the Full Court in Gray, that the test is necessity.  There is no, as it were, gloss or teasing out of the way in which it would apply in a case like the present at all to be found in Gray.

We then come to the way in which for this case the term was seen by the majority as requiring to be implied as a matter of law.  It comes in the passage which perhaps shows the lack of footing in proper principle for the conclusion ‑ ‑ ‑

FRENCH CJ:   Sorry, I think in Gray there was a question whether there is an implication by law for a class of employment contract where you have somebody, for example, who is hired on terms that involve, for example, a duty to invent, carried over to the particular class of contract where you have an academic working for a university and other ‑ so it slipped pretty closely into the ad hoc area.

MR WALKER:   Quite so.  In fact, Gray is a very good example of where either in the nature of things or perhaps unfortunately, a distinction is not completely observable.

FRENCH CJ:   But the problem there was the employer, as it were, nailed their colours to the mast of implication by law and did not go to an implication as a matter of fact, which is what the Full Court pointed out.

MR WALKER:   Quite.  For present purposes, it suffices to advance our argument to say that that last sentence in 95 in the decision under appeal is Delphic, with respect.  There is not really an explanation and certainly, if I can put it this way, their Honours do not explain how that explanation provides reasons for their conclusion.

Could I come then to the subheading which perhaps has jumped ahead too much in their Honours’ reasoning, “The content of the duty in the present case” found before paragraph 109.  The first way in which the rationale for their conclusion is expressed ‑ and this is part of my delayed answer to Justice Kiefel’s question ‑ is in paragraph 111, “the fact that Mr Barker was a long‑term employee” – one ‑ “of a large corporate employer” – two ‑ “is a relevant circumstance which” ‑ the phrase is “informs the operation of the implied term”.  It seems, with respect, already to have come into existence by this stage of the reasoning.  “So too, the operation of that term is informed by the provisions of cl 8 – three.

Now, those are the matters to which their Honours return, but may I pause to elaborate at this point?  The first of those two may, on one reading, contain within them notions of policy, that there is a policy that sees significance for the purposes of this putative implied term in somebody being what is called a “long‑term employee” and somewhat having what is either the fortunate or misfortune, depending upon your social views, of being such an employee of a so‑called “large corporate employer”.

It may be said, perhaps a bit facetiously, that certainly those are factors which are sufficiently vague to answer the description of the kind of policy considerations that outside a courtroom might be the subject of political debate, and we would stress controversy.  In different times and places and perhaps still differently among different people with different opinions, the advantage of being employed by a large employer, which may include a large body of employees, might justify, as it used to for those who would urge their children to take a job in the Public Service, might justify a lower salary by reason of the greater security of tenure hoped for by what might be called the organisational inertia of a large organisation.  There could be a reverse approach taken based upon what one might describe as the capitalistic acumen and aim of the large organisation and the need to share in massive profits; not true of the Public Service yet.

But those are matters of controversy and a universe away from the notion of the general acceptance which will satisfy the necessity test for implication by law into a class of contract.  The next and obvious observation is that if there is any policy behind long‑term employee and large corporate employer, it is not any more adumbrated than the reading between the lines that I have just assayed.

There are, of course, criticisms to be made if they were thought to be self‑evidently persuasive in support of the implication of the term, namely how long does one serve before one’s contract accrues by some kind of juristic barnacle approach, this implied term.  You started off as a short‑term employee without it and then you become a long‑term employee.  Bearing in mind that this is a term which in this case was held to regulate the events of not many days, it is something which either operates or does not.  There is no penumbra effect.  You either have its benefit or you do not.  None of that is answered or addressed by their Honours.

The same is true, of course, of what is a large corporate employer.  It is not the technique of the common law to look at the Fortune 500 or the local equivalent thereof.  It is not the technique of the common law to construct statistical banding of employers in order to determine what willy‑nilly their actual intention and subject only to express terms to the contrary will be terms of their contracts of employment.  As to the third one, there can be no possible policy explanation of a reference to clause 8.

KIEFEL J:   That is the curiosity of paragraph 111 in their Honours’ reasons, perhaps, but if one reads that second - what they call the second limb of paragraph 111, which does not seem to have regard to any real policy considerations, and the beginning of paragraph 112, it would seem that their Honours are postulating an implied term which operates upon the express terms of a contract and requires the employer to do something.

MR WALKER:   Yes, yes, it does.

KIEFEL J:   At the beginning of paragraph 112, are their Honours talking about the situation such as that referred to in Secured Income Real Estate, where the parties are required to co‑operate and do what is necessary to give effect - to give the other party the benefit of the contract and here it would be to make something out of the redeployment notion that underlies clause 8.

MR WALKER:   Yes, we think so, to all of that, and one sees in particular paragraph 119.  Now, true it is there their Honours are referring to reasons with which they are respectfully disagreeing, and may I just say here – perhaps I only need to say it once - we, with great respect, adopt and urge not only the scholarly analysis of the case law, but also the reasoning as a matter of analytical principle in Justice Jessup’s reasons and, in our submission, in fact Justice Jessup points out why Mackay v Dick, which is another way of naming Secured Income Real Estate as a principle, does not do what is necessary to be done to imply this term.

KIEFEL J:   But are you saying this is not the ratio of their Honours’ decision?

MR WALKER:   It is very difficult to know ‑ ‑ ‑

KIEFEL J:   How it fits in with the particular implied - the wider implied term that their Honours ‑ ‑ ‑

MR WALKER:   Quite.  It comes under the heading “An alternative approach” and perhaps I can jump to where I was going to go very soon anyhow - I will come back to clause 8 itself, but could I take you to 127?  Because of the subheading that precedes 129, this seems to be the part of their Honours’ reasoning which, as it were, completes or concludes their explanation for why there is a term, and query what its content is, because next they are going to move to breach.

But in 127, they refer back to 111, the 23 years approximately of employment because the contract was, as it were, a latter day iteration of that relationship and then the contemplation of redundancy and redeployment as an alternative to termination in clause 8.  I am bound to point out that another way of saying that equally accurately is the contemplation of termination as an alternative to redundancy and redeployment, in clause 8.  Indeed, that is the primary reading of clause 8 to which I will come, and then the:

very large corporation with a huge workforce and many and varied positions within the Bank -

That was the other paragraph to which I was going to refer in answer to Justice Kiefel’s question about policy for the same reasons as I have already put.  It may be that between the lines there are matters of policy that are being, as it were, advanced implicitly but again one need only note, taking the “many and varied positions”, apparently the idea as a matter of policy is that for such an employer, I do not know the right epithet, it is possible or convenient or not too much trouble to find somewhere for this person. 

Of course, as a matter of policy, the policy of the law, sometimes called public policy but in this court of law is not special to a particular employee, let alone to a particular employer and it looks at a genus of employment contracts, including surely the public policy of new contracts being made with and for people who have never had them before, in other words, the employment of young, highly qualified people in the place of somebody whose position has been made redundant, whose skills are not there and then obvious to the employer as appropriate to be deployed in their enterprise.  In other words, there is controversy of a kind which would classically call for parliamentary fiat if there is to be any alteration or adjustment of common law contractual rights at all.

FRENCH CJ:   The size of the organisation, of course, and the opportunities within it might be seen as a kind of factual observation about the amount of room that the employer has to move in ‑ ‑ ‑

MR WALKER:   Quite.

FRENCH CJ:   ‑ ‑ ‑ implementing clause 8, and I wonder whether there is a distinction to be drawn between the application of the implied term to this particular case and the application of the constructional approach in Mackay v Dick - not saying that Mackay v Dick supports the implication ‑ ‑ ‑

MR WALKER:   No, no.

FRENCH CJ:   ‑ ‑ ‑ but just looking in terms of outcomes.

MR WALKER:   Of course, Mackay v Dick approaches the matter in a way that does not leave any difference about which doctrine would care whether you call it interpretation or implication, but having agreed to a sale on conditions which involve trial, there must be the capacity to conduct the trial and there must be those things which are prerequisite to that trial being carried out.  Whether one call that implication of the duty of co‑operation or interpretation of that which was expressly agreed between the parties as including that which truly goes without saying because it is part and parcel of the obligation probably does not matter. 

KIEFEL J:   I think it was referred to by Justices Gummow and McHugh in Byrne as a rule of construction.

MR WALKER:   It was indeed, quite so.

KIEFEL J:   Probably one derived from civilian notions of good faith.

MR WALKER:   Quite and, equally though, their Honours are, if I may put it this way, not categorical about that.  They offer it as an understanding of the development of the matter.  My last comment is intended to be to the same effect that these, no doubt, come from deeper historical, intellectual routes which will not answer to the description of interpretation of contract or implication in fact of a term in a contract but they do all have this common feature of those matters which, as it were, are involved integrally in the obligation which is the given.  The given is that something be done.  What is involved integrally in that?  Now, that can obviously be done as a matter of interpretation.  It might be done by way of what might be called a freestanding principle regardless of interpreting words, simply saying this is what the law requires if you agree to such and such. 

KIEFEL J:   Accepting that one may put aside questions of categories, on one view if there was that approach to clause 8 and the obligations necessary to give effect to it or to be seen as provided for within it, there was no need for their Honours to search for a wider implied term.  We are in notice of contention territory here, I think.

MR WALKER:   It may be, although as we understand it, the notice of contention has tended to be The Moorcock not interpretation, we think.

KIEFEL J:   Yes, I was not sure which way it went.

MR WALKER:   No, that is the way it went, your Honour.  It is framed in terms of The Moorcock.

KIEFEL J:   It is just that the notice of contention part of the respondent’s written submissions is preceded by the implied duty of co‑operation by reference to Secured Income and clause 8.  I was not sure whether that was the lead in to the notice of contention.  I should not construe written submissions ‑ ‑ ‑

MR WALKER:   Your Honour might be right but I perhaps made the elementary error of reading the notice of contention itself.  It is expressed in The Moorcock terms and there we are.  Perhaps I should keep my powder dry on that.  Your Honours, could I then come back to paragraph 128 in the Full Court?  Your Honours will remember in 111, as it were, they jumped to the position of saying that these three circumstances informed the operation of the implied term as if it was already in place. 

In paragraph 128 it is somewhat differently put, namely, that those factors are sufficient to give rise to the implied obligation.  So it is there supplied as the foundation.  That is why I have perhaps overlaboured at this question of is there policy, referred to by their Honours.  This is what is referred to by their Honours.  It may or may not be policy.  It is certainly not policy through the required prism of necessity.  It is certainly – it does not otherwise contain any justification in terms of necessity as is familiar in our law.

Could I take your Honours now to clause 8 itself in volume 1 of the appeal book, page 131?  I want to take you to clause 6 first.  It is truly very plain.

This agreement may be terminated ‑

by agreement in writing between the parties at any time; or
except in circumstances of misconduct, by four weeks’ written notice by either party to the other party.
Bank may make a payment of an amount equivalent to four weeks’ pay in lieu of notice.

So, that is an agreed term.  As it happens, it is quite similar, subject to the stipulation for the notice, that is, the length of notice, it is quite similar to what would have been implied by law.  Then, very importantly:

In either circumstance, reason for termination shall not be required.

Now, clause 7 then deals with what I will call a general case:

Where termination of employment is initiated by the Bank other than for misconduct or unsatisfactory performance –

So, that will include the four weeks’ notice –

the Bank will, in addition to payments made under Clause 15 –

which are, as it were, accrued entitlements –

pay to the Employee compensation of an amount equivalent to 0.25 times Base Remuneration as set out in the Annexure.

So, the “initiated by the Bank” is in the nature of, may not be wholly confined to, redundancy.  It certainly will include redundancies of position.  Then one sees at the end of clause 7 at the top of page 132 of the book:

The Bank will not be under any obligation to pay any further compensation on termination other than as set out in this Clause –

I repeat, that incorporates clause 15 –

or in Clause 8.

So, we come to clause 8, which is the clause that applies in this case because of Mr Barker’s position.  Clause 8 says:

This Clause applies only where the Employee was already employed by the Bank immediately preceding the date of this Agreement.

That is his case:

In the case where the position occupied by the Employee becomes redundant –

That is also his case –

and the Bank is unable to place the Employee in an alternative position with the Bank or one of its related bodies, in keeping with the Employee’s skills and experience, the compensation payment for the Employee will be calculated on the basis of –

Then one sees a guaranteed minimum, in effect, of “$107,815.67”, the parties had agreed with extraordinary exactitude.  That is in addition to clause 15 payments, and it is a guaranteed minimum because you see it is the greater of that or what would be provided for under clause 7, and clause 7 does not apply where it is made under this clause. 

Now, the relation of those clauses ‑ 6, 7 or 8 and 15 ‑ lead to these observations, that if there had been any obligation in relation to trying to place the employee in an alternative position, and that must be what this case is about, it must be what the implied term found against us would involve, if there had been full and handsome compliance with that and an inability, then one sees the cap agreed between the parties financially on the compensation payable by reason of that redundancy, and this is a redundant position; there is no challenge to that.

It is to be recalled that, what I am going to call the policies compendiously found in writing and passages that your Honours have seen in the reasons below, were not in the Full Court held to be incorporated in, that is, to be contractually the subject of promises between the parties.  No right of Mr Barker; no obligation of my client in relation to those policies of redeployment.

So, this is a case where, in our submission, this implied term approach has been used to put at nought the careful reasoning by which those matters which were reduced to writing, after all, were not included in the express terms between the parties, but what might be regarded as some attributes of the conduct referred to in those policies appears to be inextricably involved in the content of the conduct said to be required by this implied term.  That is at least peculiar, bearing in mind the overt rejection of that conduct as being the subject matter of any contractual promise.

The other observation to be made, of course, is that there is a right to terminate on four weeks’ written notice, which is subject to the possibility of, in the event of redundancy ‑ which is the event that applies in this case ‑ the guaranteed payment for a previously employed contracting party, employee, under clause 8.

KEANE J:   So, do you say that if the bank was, in fact, able to place the employee in an alternative position, it could just give him four weeks’ notice?

MR WALKER:   Yes.

KEANE J:   Could it give him four weeks’ notice and avoid paying what clause 8 requires?

MR WALKER:   No, because the case - the clause 6 termination, would still be a termination to which clause 8 applies.  His position has been declared redundant, which has happened.  So, there is a right to terminate clause ‑ ‑ ‑

KEANE J:   No, but clause 8 does not apply, does it, because the bank is able to place him in an alternative position.

MR WALKER:   I am so sorry, but if he is able, there has been no termination on the ground of redundancy.  He could only ‑ if there was then a clause 6 termination, it would only be if it was not on the ground of redundant position that clause 8 would not apply.  If clause 6 termination was by reason of the position occupied by the employee becoming redundant, to use the words of the second line of clause 8, then the guaranteed minimum under clause 8 would still be payable.

KIEFEL J:   The obligations in clause 8 would arise?

MR WALKER:   Quit so, and all obligations imposed by clause 8 are applicable in the case of the position becoming redundant.

KIEFEL J:   Does that extend to attempting to redeploy the employee, attempting to find a position?

MR WALKER:   No, there is an event which is expressed in terms of the bank is unable to place the employee, but proving that he ‑ ‑ ‑

KIEFEL J:   Does that not suggest that the bank is required to try?

MR WALKER:   There is no question that proving that event has occurred will mostly involve proving something about efforts.  By the way, not always.  Positions may be redundant which involve such specialised skills that there is simply nowhere else, even in the very large corporation – in other words, there are efforts and efforts.  It may simply require ‑ ‑ ‑

KIEFEL J:   The clause could not operate in the factual scenario, that is the kind of ‑ ‑ ‑

MR WALKER:   Well, there would then be very clearly an inability to place the employee in an alternate position.

KIEFEL J:   Yes.

MR WALKER:   But, your Honour is of course right about the likely evidentiary role of what I am going to call efforts, because the event is inability to place.  We certainly cannot avoid the payment of the guaranteed minimum by, as it were, truculently taking the position that we are not saying whether we are able or unable to place.  If we wish to declare the position occupied by the employee redundant and have done so, the minimum payment will be required to be paid, it says it will be calculated, but the word is “payment”, so there is an obligation to pay as well, by way of compensation, that is for loss of the position, meaning the termination of the employment, if we do not place.  In other words, if we do not even try, we cannot possibly be in a worse position than if we did try.  It would be absurd to read that as meaning somebody who has tried is in a worse position than somebody who has not tried.

KIEFEL J:   Is there an issue in this case about whether the appellant has taken steps?

MR WALKER:   Yes, yes.  To use the vernacular, it looks as if we dropped the ball for a little while, yes, yes.

FRENCH CJ:   This is because of all the business of emails to the terminated email address and so on.  Can I just, sorry, I want to be sure that I have not misunderstood your characterisation of the Full Court’s approach.  As I understand it, they found liability on the basis of the intersection between the implied term and clause 8.  They did not deploy the redeployment policy in aid of that determination.

MR WALKER:   Not in terms, no.

FRENCH CJ:   No.

MR WALKER:   No, and it is not part of the contract.

FRENCH CJ:   Yes.

MR WALKER:   We were not successfully sued for breaching an obligation ‑ ‑ ‑

FRENCH CJ:   Yes.

MR WALKER:   ‑ ‑ ‑ which emerges from clause 8 as a matter, say, of interpretation, to try harder than we did.  What that would amount to in damages, of course, would depend upon whether the attempts would prove fruitful, because if they did not prove fruitful, there is the clause 8 compensation.

FRENCH CJ:   It is all clause 8 and the implied term.  The redeployment policy does not play any part in their Honours’ reasoning.

MR WALKER:   That is right, that is right.  Could I then take you, in volume 1 of the appeal book, to page 135 which is the letter of 2 March 2009 which contains, as it were, the state of affairs at the beginning of the period that marks our supposed failure to do what the supposed implied term required? 

It refers to a discussion regarding employment.  It says in the fourth paragraph that as a result of some changes Mr Barker has not been allocated to a position within the corporate financial services structure, the direct impact of that being that his current position of regional executor is to be made redundant.  That will be effective straightaway. 

Then there is a declared preference to redeploy and a statement of intent to explore in consultation appropriate options, an offer of “services”, an encouragement of what is called “proactive steps” in seeking redeployment by Mr Barker himself, a statement of intent to begin the redeployment process immediately and to continually review options and then in terms, an understanding of if there is an inability to identify a suitable position, and that obviously includes and indeed is mostly directed to, the inability notwithstanding efforts:

and the decision is made to retrench you, you will be paid redundancy entitlements in accordance with –

what we know is clause 8.  Then there is a reference to matters that might flow thereafter and finally a description of the whole of this as being a “process” in the last paragraph about which he is encouraged to be in touch.  In our submission, what that letter says, and not surprisingly how could it otherwise, is that redundancy of his position will lead to one of two possibilities in relation to his employment.  It will be continued in a different position if one can be found – that is the preference – or it will be terminated.

This is plainly a letter about the possibility of termination as much as it is about the possibility of redeployment.  It is a binary outcome of possibilities.  That is important, obviously, in terms of the third of the issues that we have raised which, in England, has become known as an exclusion or exclusion zone or exclusion area. 

Your Honours, can I now come to those English authorities? I want to start with one that is variously named in the writings on this topic. The first of the appellants named in the report is Malik, but the one whose name is usually used in English references is Mahmud. They are both appealing against their former employee in liquidation, the late and unlamented BCCI [1998] AC 20.

Now, one thing to say generally about this case is it is not in any conventional terms upon a reading of it alone easily seen, if at all capable of being seen, as the source of authority in any understanding of stare decisis of which we are aware for this implied term.  The first and obvious reason why that is so is easily picked up by the opening sentence attributed to the counsel for the applicants at page 23.  It was common ground, it was not a matter of argument in the Lords at all that this term applied, and that is echoed in the opening words of the speech of Lord Nicholls on page 33, just after letter H at the foot of that page:

In the Court of Appeal and in your Lordships’ House the parties were agreed that –

Then one sees at the top of the page, 34, letter A, the:

implied term to the effect that the bank would not, without reasonable and proper cause, conduct itself in a manner likely to destroy or seriously damage the relationship of confidence and trust between employer and employee.

Under the subheading on page 34 of “A dishonest and corrupt business”, which I think is a handy way of summarising the objection to BCCI by its employees after the event of their termination, his Lordship between F and G sets out what he calls an “intuitive response”, about which we would make this comment.  Another way, whether it is intuitive or not, to respond to those matters would be to observe that there simply cannot be a contract which requires participation in crime, one cannot form a contract that the law will recognise, let alone enforce, and that perhaps might have been a simpler, a doctrinal rather than intuitive response.

At the top of page 35 there is an interesting expression for the obligation which was agreed or common ground, in other words, not established by this decision at all.  His Lordship talks about the implied obligation not to conduct a dishonest or corrupt business.  With respect, that is a very tenuous way of teasing out the content of a term.  In any event, presumably it would extend to falsifying the company’s tax returns.  Where would it end, one does not know.  His Lordship says:

This implied obligation is no more than –

what he calls –

one particular aspect of the portmanteau, general obligation not to engage –

et cetera.  In our submission, no doubt explained by the fact that there was no contest between the parties about this supposed term, it can be seen immediately that there is simply no footing or basis or root here displayed in relation to this term which ties it to necessity.  By tying it to necessity, of course, it is shaped and confined only to the exigency in question, and none is ever identified in this reasoning and it later turns out that, oddly, this is seen as the authority.  There are precursors, to which reference is made, but this is seen as the authority.  In our submission, it is not something which this Court would seek in any respect, either as to technique or outcome, to emulate. 

A difficulty of a kind which was prescient bearing in mind what comes up later in the so‑called Johnson exclusion zone is foreshadowed on page 36 between D and E, the passage headed “Premature termination losses”.  I will not read it, but one sees the observations concerning causation of loss where there is a termination which, in our submission, is relevant in this case.

Now, there is some discussion of what might be called a policy kind, certainly not couched in terms of necessity in relation to a contract, the terms of which are being considered.  At the foot of page 37, just before letter G and following - I will not read it - nothing in that discussion, such as it is, is informative of an approach requiring the necessity test to be satisfied.  As your Honours know Addis v Gramophone was the fulcrum around which much of the argument and reasoning of this and other decisions turned.  I will pass over most of that, not because it is irrelevant to the decisions; it was quite central, but because it is peripheral to our concerns.

Could I take your Honours then to page 45?  In the differing reasons of Lord Steyn, here there are references to what might be understood as being policy matters.  Under the heading “The implied term of mutual trust and confidence”, just after letter C, His Lordship refers, see letter D, to the argument relying:

on a standardised term implied by law, that is, on a term which is said to be an incident of all contracts of employment -

MR KENZIE:   Yes, it is Professor Paul Finn “Statutes and the Common Law:  The Continuing Story” and pages 59 and 60 of the article which we have provided to the Court which basically say that considerations like those discussed in Brodie suggest that it is the common law – it is the courts that are in charge of this debate and notions of judicial trepidation are affected by the considerations discussed in Lange.

Your Honours, could I say something about the implied duty of co‑operation by reference to clause 8 of the contract?  I took your Honours before to what the Full Court had to say about the implied duty of co‑operation and to the fact that the court had identified clause 8 as part of the circumstances which gave rise to the content.

The thing about clause 8 that is significant ‑ 131 of the materials ‑ is that it provides in its terms for the availability of compensation payment calculated in accordance with the term, 107,000 et cetera, but that amount is payable in circumstances:

where the position occupied by the Employee becomes redundant –

that was Mr Barker’s position ‑

and the Bank is unable to place the Employee in an alternative position with the Bank or one of its related bodies, in keeping with the Employee’s skill and experience –

That step is a step towards the entitlement to the compensation payment identified in clause 8.  If the Bank does not take steps to determine whether or not it is able to place the employee in that position, the compensation payment is not available.  Clause 8 provides a basis for a duty of co‑operation to apply in the context of Mr Barker and, your Honour, what the court ended up doing in paragraphs 130 and 131 is to say that the Bank had taken no steps as it was required to do.

FRENCH CJ:   Now, is this a kind of fall‑back position because the Full Court did not make a finding of breach of implied term of co‑operation, did it?

MR KENZIE:   Well, your Honour, that ‑ ‑ ‑

FRENCH CJ:   You explored this earlier with Justice Kiefel.

MR KENZIE:   I did and, your Honour, what they actually did – it is true that paragraphs 130 and 131 are cast in terms of the implied term of trust and confidence.  There is no doubt about that.  But what the majority did was to say in relation to the duty of the implied term of co‑operation, in paragraph 126 the term operated.  At paragraph 127, they referred to the circumstances including clause 8.  In paragraph 128, they said:

that was sufficient to give rise to the implied obligation of co‑operation in a way that is analogous to the duty of the employer to take the positive steps identified in Scally.

Then in paragraphs 129 and 130, they asked whether there was a breach of the implied term and there is no running away from the fact that in those paragraphs they referred to the “breach of the implied term of mutual trust and confidence”.  But, in paragraph 131, they said that the term required the Bank to:

take positive steps to consult with Mr Barker about alternative positions and to give him the opportunity to apply for them. Instead, it failed to make contact ‑ ‑ ‑

FRENCH CJ:   Does that involve some sort of sub silentio assumption that if there is a breach of the implied obligation of co‑operation in these circumstances it is necessarily a breach of the implied term of trust and confidence?

MR KENZIE:   I would not read it that way, your Honour.  It rather appears to be the Court taking an alternative approach that they first ‑ ‑ ‑

KIEFEL J:   Perhaps this is where paragraph 118 becomes important, because, I must say, on the way I originally had read it, I had read their Honours’ alternative approach regarding the implied duty of co‑operation as simply supporting the widely implied term in relation to mutual confidence.

MR KENZIE:   Could I submit to your Honour that what they did in those paragraphs was to say, look, it is suggested that the duty that we are talking about grew out of the duty of co‑operation, or at least there is a suggestion to that effect, in paragraphs 118 and 119.

KIEFEL J:   Well, perhaps another question that needs to be asked is, was the alternative of an implied duty of co‑operation argued in the Full Court?

MR KENZIE:   It appeared – we cannot find it in the pleadings, your Honour, and so it was not put at the outset but it was – it is impossible to read those paragraphs in any other way than a consideration of the application of the term and not simply as feeding into, in our respectful submission, a debate about the implied term of trust and confidence in itself and that is because paragraphs 120 through to 128 are paragraphs about the implied duty of co‑operation and not paragraphs about the implied duty of trust and confidence. 

GAGELER J:   What is the implied duty here?  Is it implied duty to co‑operate to allow Mr Barker to have the benefit of the payment in clause 8?

MR KENZIE:   The implied duty is to co‑operate in taking the step that it is a precondition to his receipt of the compensation.  So, they have to decide that they are unable to redeploy him.  The implication is that they have to take steps to determine that they are unable to redeploy him and they have to co‑operate in relation to that.

KEANE J:   Is it limited to that, though, because surely if they take steps to redeploy him and succeed the consequence is the benefit he obtains is not the terminating payment but it is that he remains in employment.  He remains unterminated.

MR KENZIE:   Yes, or avoids termination.  It has wider ‑ ‑ ‑

KEANE J:   That is why one of the questions is in relation to clause 8, if the steps are taken they may be successful.  What if they are successful?  If they are successful, he is not terminated, one would think.

MR KENZIE:   Indeed, that is the basis of the relief obtained by Mr Barker, ultimately.  The court found that there was a breach of the implied term of trust and confidence.  That term meant that in the circumstances of the case, there was a duty to take the steps that were identified.  They were not taken.  Accordingly, there was a breach of the duty and that led to a conclusion that Mr Barker’s employment was terminated in circumstances where there had been no step taken towards redeployment and he received damages on the basis that he had been fundamentally damaged in that respect.

KEANE J:   Do you say that the damages he is entitled to recover are not limited to the formula in clause 8 because to allow that to occur would be to allow the Bank to take advantage of its failure to take the steps that clause 8 contemplates?

MR KENZIE:   We say two things - yes, well, clause 8 was not activated because it never reached that stage but notice was not given to Mr Barker in accordance with clause 6.  Justice Besanko found that his contract entitled him to get notice in writing.  There had been no notice in writing so the issue of four weeks’ notice went off the table so he was a person who had not been terminated.  At that time, he was a person who was entitled to the benefit of clause 8, insofar as it went.

KIEFEL J:   Justice Besanko assessed damages on the basis of a loss of chance of redeployment.

MR KENZIE:   He assessed damages on the basis - that is right, that he had a 30 per cent chance of staying in the job.

KIEFEL J:   That is applying the policies which the Full Court did not apply but, nevertheless, the same factual position would maintain, would it not?

MR KENZIE:   It would.  His Honour was simply applying…..and saying there is a loss of opportunity.  If these had taken place as they should, his Honour assessed that he would have had a realistic opportunity of redeployment, and that was circumstances where the Bank said they wanted him kept in employment, and that took the Court to the question of the relationship between the damages that were sought and the impact of the capacity of the employer to terminate on four weeks’ notice.  The Court said ‑ and Justice Jessup discusses this in his Honour’s judgment; I will give your Honours a reference ‑ that the case was to be approached on the basis that the four weeks’ notice of termination was not the parameters of the entitlement to recovery because the Bank wanted him to stay and, had the breach not taken effect, he would have had an expectation of staying, and he had never been given four weeks’ notice under the contract.

FRENCH CJ:   Mr Kenzie, as I said earlier, I did not want to see you rushed unduly in the last stage of your argument, so I think it might an appropriate time now to adjourn and we will adjourn until 10.15 tomorrow morning.

MR KENZIE:   Certainly, thank you, your Honour.

AT 4.19 PM THE MATTER WAS ADJOURNED
UNTIL WEDNESDAY, 9 APRIL 2014