Condren v The Southport Workers Community Club Inc
[2010] QSC 130
•30 April 2010
SUPREME COURT OF QUEENSLAND
CITATION:
Condren v The Southport Workers Community Club Inc [2010] QSC 130
PARTIES:
STEPHEN JOSEPH CONDREN
Plaintiff
v
THE SOUTHPORT WORKERS COMMUNITY CLUB INC
Defendant
FILE NO/S:
BS 2319 of 2008
DIVISION:
Trial Division
PROCEEDING:
Claim
ORIGINATING COURT:
Supreme Court at Brisbane
DELIVERED ON:
30 April 2010
DELIVERED AT:
Brisbane
HEARING DATE:
16-18 December 2009
JUDGE:
McMurdo J
ORDER:
Judgment for the plaintiff against the defendant in the sum of $21,810.74.
CATCHWORDS:
EMPLOYMENT LAW – TERMINATION AND BREACH OF CONTRACT – GROUNDS – MISCONDUCT AND DISHONESTY – where the defendant dismissed the plaintiff without notice for certain conduct allegedly amounting to misconduct and dishonesty – whether the plaintiff was wrongfully dismissed
TORTS – MISCELLANEOUS TORTS – CONVERSION – where the defendant provided the plaintiff with two cars for personal use under the plaintiff’s employment contract – where the plaintiff retained the proceeds of sale of the first car and has kept the second car in his possession since his dismissal – whether the defendant is entitled to the proceeds of sale of the first car and damages for conversion of the second car
Blyth Chemicals Limited v Bushnell (1933) 49 CLR 66
Concut Pty Ltd v Worrell (2000) 176 ALR 693
Lane v Arrowcrest Group Pty Limited (1990) 27 FCR 427
Serventi v John Holland Group Pty Ltd [2006] FCA 1049
COUNSEL:
J H Pearce for the plaintiff
T Carmody SC with M Foley for the defendant
SOLICITORS:
Slater & Gordon for the plaintiff
Oden Legal for the defendant
The plaintiff, Mr Condren, was the manager of the defendant (“the Club”) from 1986 until 5 October 2007, when he was dismissed without notice. He seeks payment of outstanding annual leave and long service entitlements, about which there is no controversy. He seeks damages for wrongful dismissal, as to which the Club says that it was entitled to dismiss him without notice for certain misconduct. And he seeks an order to have transferred to him by the Club the car which it had provided for his use and which he has kept in his possession since his dismissal.
The Club counterclaims for damages for conversion of that car. It further claims from the plaintiff the proceeds of sale of another car which the Club had provided for the plaintiff’s use prior to the one which he has kept. Those proceeds were paid by the Club to the plaintiff, it says without the requisite approval of its Board of Directors, when that car was sold in 1999.
The contracts of employment
There are two relevant contract documents. One is a form of contract between Mr Condren and the Club dated 30 November 1999 (“the 1999 contract”); the other is a contract between them dated 27 February 2004 (“the 2004 contract”). There is no controversy concerning the 1999 contract. It is common ground that it was intended to and did set out the terms of Mr Condren’s employment. It was replaced by the 2004 contract, which the Club pleaded was not signed with the approval of the Board, but which ultimately the Club concedes was enforceable.
However, Mr Condren’s case is that there was also an oral agreement entitling him, in the circumstances which have arisen, to ownership of the car in his possession (which I will call the second car). He claims also that there was an oral agreement by which he was entitled to the proceeds of sale of the previous car, (which I will call the first car). Each of those agreements is strongly disputed by the Club.
The 1999 agreement was expressed to be the result of a recommendation by the Club’s external accountants and auditors in a letter of 25 November 1999. By that letter, the Club’s auditor, Mr McFarlane, advised that a certain “package would not be considered excessive” which was as follows:
“1. Current salary of $85,000 to be indexed yearly with CPI.
2....
3.Motor vehicle to be supplied, with the Club to pay the FBT and all running costs.
4.Private family medical and hospital cover.
5.On line computer at home for direct access to Club computer.”
By cl 3 of the 1999 contract, the parties agreed that Mr Condren would be remunerated as the auditor had recommended but with an additional benefit as follows:
“3.2In addition to the base salary the Club shall pay TWO HUNDRED DOLLARS ($200.00) per week payable monthly for entertainment, meals and incidental costs.”
The use of a car was agreed as follows:
“3.5The Club shall supply a car for personal use and pay the FBT and all running costs.”
This term did not entitle Mr Condren to have the car transferred to him or its ultimate proceeds of sale paid to him, as Mr Condren’s evidence concedes. As I will discuss, his evidence is that the Club’s decision to pay him the proceeds of sale of the first car, which he used during the period of the 1999 contract, was made only when it was sold in late 2003.
The 2004 contract closely followed the terms of the 1999 contract. However, the base salary was increased to $125,000 per annum. Importantly, there was an identical provision for the supply of a car.
By cl 5.1 of the 2004 contract, it was agreed that this employment should continue until otherwise agreed between the parties or determined according to the contract. By cl 5.2 Mr Condren was entitled to terminate the contract by giving not less than one month’s notice. The Club was entitled to terminate the contract without notice according to cl 5.3 which was as follows:
“5.3This Agreement may be terminated by the Club without notice if:-
(a)The Manger is adjudicated by the Club to be bankrupt or guilty of any gross breach of faith or gross default or gross misconduct in the discharge of the duties or powers or of any dishonesty whether relating to the affairs of the Club or not or do or fail to do any act which shall in any way prejudice any of the licences held by the Club; or
(b)The Manger is guilty of any breach or non-observance of any essential term of this Agreement.”
Clause 6.2 provided:
“6.2 In the event that this Agreement is terminated for any reasons set forth in clause 5.3 hereof, the Club shall pay to the Manager all fees and/or expenses whether by way of reimbursement or otherwise payable by the Club to the Manager in accordance with the provisions of section 3 of this Agreement, but no further amounts.”
The Club’s case is that Mr Condren was guilty of gross misconduct and dishonesty within cl 5.3(a).
Misconduct and dishonesty
The Club’s case has essentially two parts. One is based upon the receipt by Mr Condren of the proceeds of sale of the first car. It is alleged that his conduct in causing that payment to be made to him was misconduct or dishonesty. It is further alleged that if he was entitled to the money, it was taxable income in his hands and that he was guilty of misconduct or dishonesty by failing to declare that income to the Australian Tax Office and by having the company’s accounts record the payment as “motor vehicle expenses”, rather than as a payment of a salary or wage.
The second area of complaint is in relation to the $200 per week allowance for which the 1999 and 2004 contracts provided. The Club’s case is that he dishonestly failed to declare this as taxable income and falsified the Club’s records so as to conceal the fact that these payments had been made to him with the intention of concealing part of his taxable income.
Proceeds of the car
Mr Condren’s evidence is that the proceeds of sale of the first car were paid to him with the authority of the Club’s then president, Mr Fred Muirhead, and its then secretary/treasurer, Ms Valda King. Mr Muirhead became ill in 2005 and then left the Board. He is now deceased. Ms King was called in Mr Condren’s case.
It is clear from the evidence of several witnesses that Mr Muirhead was a strong personality who was accustomed to getting his own way in the governance of the Club. There were monthly Board meetings and the Board, which included Mr Muirhead and Ms King, consisted of nine members, but Mr Muirhead appears to have dominated the proceedings at those meetings. At the same time, he had a close working relationship with Mr Condren. Mr Muirhead seems to have had a high regard for Mr Condren’s performance of his duties. The payment of the proceeds from the sale of the car to Mr Condren was the result of Mr Muirhead’s wish to reward him for his services. The present controversy comes from the fact that, as the Club now alleges, this payment was not duly authorised by the Board.
The first car was acquired by the Club in 1999 and was provided to Mr Condren for his use under the 1999 contract. According to Mr Condren’s evidence, the car was due for replacement towards the end of 2003, when he had some discussions with Mr Muirhead and Ms King about a new employment contract. He says that shortly afterwards, in or about November 2003, he had a meeting with Mr Muirhead, Ms King and Mr McFarlane in which there was a discussion about this car. He says that it was decided that:
“the car that I had thought was only on lease to me would be mine, as the Club was going well and because in both [Mr McFarlane’s and Ms King’s] opinions the car should have always been mine.”
Mr Condren negotiated a trade-in of this car and the purchase by the Club of the second car as its replacement. The price (including GST) of the second car was $70,500, the whole of which was borrowed by the Club from Esanda and secured by a chattel mortgage over the second car. The trade-in price was $31,500 including GST, and was paid to the Club by the dealer. The reason why the Club did not simply borrow and pay the net cost of $39,000 was that Mr Condren was told he would be paid the trade-in allowance. The dealer deposited $31,500 to the Club’s account on 12 November 2003. By a cheque dated 10 November 2003, debited to the Club’s account on the following day, the Club paid Mr Condren $28,636.37, which was that sum of $31,500 less the GST. The cheque was signed by Mr Muirhead and by Mr Condren himself.
On Mr Condren’s evidence, after the payment was made and “in about November or December 2003”, he attended a Board meeting at which the Board was told that his previous car “had been changed over into my name” and that:
“the new car that had been provided to me would become mine at the end of the lease, which was a four year lease, and that if I left the Club prior to that time I would have the option of paying out the remainder of the lease myself and then having the car revert to my ownership.”
He says that at the meeting, Mr Muirhead asked the Board whether anyone opposed those arrangements and there was no opposition.
Ms King’s evidence was that she recalled being told at a meeting sometime in 2003, although she does not recall whether it was a Board meeting, that Mr Muirhead and Mr Chapman (another Board member) had agreed with Mr Condren that the first car would belong to him. According to her affidavit, there was another meeting at the end of 2003 which she attended with Mr Muirhead and Mr McFarlane, in which they discussed Mr Condren’s proposed revised salary. She recalls that Mr Condren was then invited into the room and informed of the offer, which he said that he would accept “because his ownership of the car was included in the package”. She says that after this meeting she discussed with Mr Muirhead what information in respect of Mr Condren’s new remuneration should go to the Board and that Mr Muirhead said that the Board “did not need to know everything about [Mr Condren’s] package as it had not changed much from the previous contract that he had” and that “[t]he only real change was the amount of money he was being paid per year”.
In cross-examination, Ms King was asked whether the Board had ever been informed, “as a whole at any meeting”, that the plaintiff was to own the first car and she answered:
“I can’t remember it coming through the Board totally at any time. It was tried at several times to get through, but I’m not sure – it was interrupted several times … I can’t remember if it went before the Board and it was finalised or not.”
In an affidavit Ms King swore that:
“an oral agreement was reached by which the Club agreed with [Mr Condren] that the motor vehicle would become his at the end of the lease period.”
But this does not prove an approval by the Board.
Mr Chapman’s evidence was that he was always under the impression that this first car was “Stephen’s car”, but that had been his impression from the outset of the 1999 contract. He recalled a discussion with Mr Condren and Mr Muirhead in which Mr Condren said he would take a lower salary “because he got the car, or words to that effect”. He said he recalled that Mr Muirhead said in this discussion words to the effect that “every four years you get a car”. However, that evidence does not clearly support Mr Condren’s case: it is equally referable to the use of a car according to each of the 1999 and 2004 contracts.
Similarly, evidence by another Board member, Ms Saxby, that she recalled being “aware that Mr Condren took a lower salary because he was getting a car as well”, is equally referable to his entitlement to the use of a car under the written contracts. She recalled being told, she thought in the meeting of the Board at which the (proposed) 2004 contract was discussed, that “[Mr Condren’s] car would become his own after four years”. But that relates, of course, to the second car and not to the proceeds of sale of the first car.
Mr Higgs is currently the President of the Club and was a Board member at all relevant times. Apparently he was not close to Mr Muirhead and the effect of much of his evidence is that Mr Muirhead kept from the Board relevant information and administered the Club as if it were his own enterprise. Mr Higgs was directly involved in the dismissal of Mr Condren. According to Mr Higgs, there was no discussion at any Board meeting either as to the payment of the proceeds of sale of the first car to Mr Condren or to his becoming in some way entitled to own the second car.
Mr Maston was employed by the Club from 1999 in various capacities before becoming the financial controller of the Club from about 2003. He became the Club manager on termination of Mr Condren’s employment. He is now employed elsewhere. Shortly after he became the financial controller, he came across the payment which had been made to Mr Condren. He rang one of the Club’s external accountants, Mr Hunter, and asked him how he should report the payment. Mr Hunter advised him “to put it against wages”, which he did. Subsequently, when at the Club’s premises, Mr Hunter noticed that the wages account was not balanced because of this payment and advised Mr Maston “to code the payment as a vehicle expense”. Mr Maston did so with the consequence that the Club paid an amount for fringe benefits tax for this payment. In consequence the amount was not shown within the Club’s records as a salary or bonus paid to Mr Condren.
The minutes of the monthly Board meetings of November 2003 through February 2004 are in evidence. There is no reference to this payment of the proceeds of sale of the first car in any of them.
It was submitted for Mr Condren that I should infer that there were documents before the Board in December 2003 which disclosed this payment. In an affidavit of Mr Wilson, a director of the Club from 2005, there is exhibited a copy of the general ledger of the Club’s accounts which recorded this payment as made in November 2003 and with the “reference” of “Steve Condren wages”. In the minutes of the Board meeting of 21 December 2003 there appears this reference:
“Accounts: Moved Val King
Seconded: Jim Higgs”
From this I would infer that certain accounts were presented to the Board at that meeting and that they were approved. Counsel for Mr Condren argued for an inference that those accounts included this extract from the general ledger, thereby identifying the payment to Mr Condren. The difficulty with that argument is that the accounts, as were presented in that Board meeting, are not in evidence and no witness offered a recollection of their contents. Nor was the proposition that the accounts then before the Board included the extract from the general ledger put to, for example, Mr Higgs.
A related argument was that the payment would have been disclosed by another document made available to Board members, in the form of details of cheques which had been written. Again what is said to have been the relevant document is not in evidence and nor am I able to conclude that it would have revealed the payment to Mr Condren. And the argument as to that document is not that its contents were approved by the Board, but simply that Board members had an opportunity to discover the payment by the document being available to them.
In my conclusion it is more probable than not that the Board did not approve this payment. First there is the absence of any reference to it within minutes of any relevant Board meeting. The payment of such a substantial bonus to Mr Condren, being about a third of his then annual salary, was likely to have been recorded had it been discussed. Secondly, there is the fact that the supposed approval by the Board
post-dated the payment itself. Had Mr Muirhead thought that the Board’s approval should be obtained, there is no apparent reason why he would not have put this matter to the Board before making the payment. Thirdly, the only definite recollection of this being put to the Board was that of Mr Condren. The weight of his evidence is obviously affected not only by his interest in the outcome, but also by the circumstances of this payment and of other matters which are discussed below.
For this payment, he was a party to the receipt of a substantial sum of money, which he then knew had not been approved by the Board and was considerably in excess of his entitlement under the written contract of employment which had been approved by the Board.
It is convenient at this point to consider the Club’s counterclaim for repayment of this sum with interest. Counsel for the Club argued that it was “an unjust enrichment”, in that it was paid to Mr Condren for no consideration. But as the argument was developed, the sum was claimed by the Club on the basis that it was an unauthorised payment of its funds and for no consideration. In response, there was no pleaded defence of a change of position or that the Club was in some way estopped from seeking repayment. Rather, it was argued that there was an entitlement to the proceeds of the sale of this car from the 1999 contract, insofar as it obliged the Club to “supply a car for personal use and pay the FBT and all running costs”. The Club performed its obligation to supply a car for his use. But once it was supplying Mr Condren with the second car, it was not obliged to pay him the proceeds of its sale of the first car. And in his address, counsel for Mr Condren asserted that there had been a change of position (on the faith of this receipt) although there was no evidence to that effect.
It was argued that if the Board itself had not approved payment, nevertheless there had been a delegation by the Board to Mr Muirhead to approve it. According to the Club’s Constitution, a function of the Board expressed within cl 13(2) was as follows:
“(e)[To] [e]ngage a Club Manager at such remuneration as from time to time be fixed by the Board of Directors who shall be responsible for engaging and dismissal of Club employees and who shall ensure that terms and conditions of employment shall comply with current industrial awards. …”
By cl 15(1) of the Constitution, the Board might delegate any of its powers to a sub-committee. Quite apart from the difference between a power of the Board and a function of the Board, there is in this case no evidence of any delegation to Mr Muirhead, or some sub-committee, of the responsibility for deciding the remuneration to be paid to Mr Condren.
This payment constituted part of the remuneration paid to Mr Condren and only the Board was authorised to decide to pay it. Mr Muirhead was not authorised to do so absent the Board’s approval. And the other signatory to the cheque, Mr Condren himself, clearly was not authorised to pay himself a bonus. I infer that Mr Condren knew that this payment should have been authorised by the Board. He did not give evidence to the effect that he believed that the Board’s approval was unnecessary. And although his counsel argued that he was entitled to the payment by the terms of the 1999 contract, in his own evidence he appeared to disavow such a case, saying that it was not until late 2003 that he came to understand that he would receive this benefit. Accordingly, this was an unauthorised disposition of the Club’s funds, for no consideration and for which there is no pleaded or established case of change of position or estoppel. Mr Condren not only received the payment knowing it to be unauthorised, he caused the payment to be made, in breach of his duty to serve the Club in good faith. The Club has established its entitlement to repayment of the sum paid together with interest.
The $200 allowance
According to each of the 1999 and 2004 contracts, Mr Condren was entitled to payment of $200 per week payable monthly “for entertainment, meals and incidental costs”. Mr Condren caused that allowance to be paid to himself. The Club’s case is that he was entitled only to be reimbursed for such expenses of this nature as were incurred by Mr Condren, up to a maximum of $200 per week. It alleges that Mr Condren falsified claims for reimbursement and thereby drew sums from the Club dishonestly. The Club also alleges that he was dishonest in not declaring these payments as taxable income and in drawing them in such a way as to disguise, within the Club’s records, the fact that they were effectively payments of taxable income.
As I interpret cl 3.2 of each of the 1999 and 2004 contracts, Mr Condren’s entitlement was not to an amount up to $200 per week; rather it was an entitlement to an amount of $200 per week. In effect it was an increment of his salary. I infer that it was expressed as a payment for entertainment, meals and incidental costs, in order to assist Mr Condren insofar as tax was concerned and perhaps also to recognise that Mr Condren did incur some expenses of this kind.
There is no counterclaim by the Club for repayment of any amount paid to him in this respect. Its case, that he was guilty of dishonesty by falsely recording payments as something else, is relevant to the question of whether there was misconduct which entitled the Club to terminate his employment.
Mr Wilson investigated these claims for expenses after termination of Mr Condren’s employment. He then became aware that Mr Condren had received amounts equivalent to $200 per week by cashing cheques drawn by the Club in response to cheque requisitions describing the expense as something like “pokie cash door prizes/door prizes/promotions”. Mr Wilson noted that such payments to Mr Condren were not within his group certificate payment summaries from 2004 until 2008, which Mr Condren had signed on behalf of the Club.
Mr Condren’s evidence is that the idea of not declaring these payments came from a discussion he had with Mr Muirhead in 1999. He says that Mr Muirhead then told him that he (Mr Muirhead) was receiving $150 per week as an allowance paid to him in cash but which was represented to be “poker machine maintenance”. Mr Muirhead did not have to pay tax upon it, he said, because of “the way it was paid”. Mr Muirhead said to Mr Condren words to the effect: “your $200 weekly allowance would be paid in the same manner so you will not have to pay tax on it also”. Mr Muirhead advised him to “write it down in the accounts” as a payment in respect of “door prizes and poker machine promotions”. I accept that evidence.
The facts are not, therefore, in dispute. Mr Condren caused himself to be paid his $200 a week allowance because he believed that he could avoid the incidence of income tax. He did this, in so far as the Club’s records were concerned, in a way which was apparent to other employees of the Club and, Mr Condren said, known to the Club’s auditors. In that respect there is support for Mr Condren in an affidavit of Mr Maston, who received payments of an allowance by effectively the same means. Mr Maston said that he asked Mr Hunter on one occasion about how these expenses should be recorded and that Mr Hunter told him that no income tax needed to be paid by him on this allowance received under the description “Club promotions”. Mr Maston, as the financial controller of the Club from 2003 until November 2007, saw nothing wrong with the same conduct of Mr Condren during this time. Although undoubtedly Mr Condren incurred some expenses entertaining at the Club, he did not make claims for reimbursement of them beyond the $200 per week.
In these circumstances it is not open to the Club to now complain that Mr Condren is guilty of some misconduct or dishonesty, entitling the Club to summarily dismiss him upon the basis of this practice. He was entitled to $200 per week and the Club condoned the practice under which he drew this allowance. The position here is quite different from that in relation to the proceeds of sale of the first car, where he received a substantial benefit in addition to the remuneration which had been agreed by the Board and set out in his contract of employment.
Grounds for dismissal
The Club bears the onus of establishing misconduct or dishonesty entitling it to summarily dismiss its employee.[1] Each of the arguments appears to accept that the meaning of misconduct within cl 5 of the 2004 contract accords with what is sufficient under the general law to justify a summary dismissal. In Blyth Chemicals Limited v Bushnell[2], in a passage cited with approval in Concut Pty Ltd v Worrell[3], Dixon and McTiernan JJ said:
“Conduct which in respect of important matters is incompatible with the fulfilment of an employee’s duty, or involves an opposition, or conflict between his interest and his duty to his employer, or impedes the faithful performance of his obligations, or is destructive of the necessary confidence between employer and employee, is a ground of dismissal … But the conduct of the employee must itself involve the incompatibility, conflict, or impediment, or be destructive of confidence. An actual repugnance between his acts and his relationship must be found. It is not enough that ground for uneasiness as to its future conduct arises.”
[1]Serventi v John Holland Group Pty Ltd [2006] FCA 1049, [7]-[9].
[2](1933) 49 CLR 66, 81-82.
[3](2000) 176 ALR 693, [25] (Gleeson CJ, Gaudron and Gummow JJ).
In my conclusion, Mr Condren’s conduct in relation to the proceeds of sale of the first car constituted gross misconduct and dishonesty by which the Club was entitled to dismiss him. With Mr Muirhead he signed the cheque which was paid to him, when he knew that this use of the company’s funds had not been made known to or approved by the Board and that it was not something to which he was contractually entitled. He may have believed that he was deserving of such a gift and that it should be for Mr Muirhead to decide to confer it. But this was a substantial ex gratia payment which should not have been kept from the Board. A reading of the minutes of meetings of the Board shows that routinely, matters of much less moment in a monetary sense were considered by the Board. Mr Condren could not have thought that the Board would be uninterested in this payment. Further, he said nothing to the Board about having recently received this payment when the Board considered, in February 2004, the increase in his salary to $125,000. The fact that he had recently received such a substantial bonus would have been material to the Board in its consideration of this proposal to increase Mr Condren’s salary by about 50 per cent from that payable under the 1999 contract.
For Mr Condren it was argued that any misconduct had been condoned by the Club, so that it could not have terminated his employment for it. However, there was no condonation of the conduct in respect of the proceeds of sale of the first car. I accept Mr Wilson’s evidence that it was only after an issue arose about leave entitlements, following Mr Condren’s dismissal, that the facts and circumstances of this payment were disclosed to the Board. It is accepted that subsequently discovered conduct can be used to justify a dismissal as long as what is discovered amounts to facts existing at the time of the dismissal and the employer had not failed to make reasonable enquiries prior to the dismissal.[4] It was not argued that the Club, at the direction of its Board, should have investigated something which would have alerted it to this payment so that the Club became disentitled to rely upon this ground.
[4]Lane v Arrowcrest Group Pty Limited (1990) 27 FCR 427, 456.
Had I not found that there was a ground for dismissal, it would have been necessary to decide what constituted reasonable notice for the termination of Mr Condren’s employment. Ultimately it was common ground that in that event, his employment could be terminated on such notice and the argument was as to its duration. Mr Condren’s case was that 18 months notice was required; the Club’s case was for a period of three to six months. This is a question of fact, for which the relevant considerations would include the long period of Mr Condren’s service, the seniority of his position and his high salary and allowances. In my view a period of nine month’s notice would have been the minimum required. On that basis I would have assessed Mr Condren’s damages for wrongful dismissal as follows:
Base salary $ 93,750.00
Weekly allowance $ 7,800.00
Health insurance $ 3,000.00
Superannuation $ 10,886.00
$115,436.00
Less:
Expenses (within cl 3.2) not incurred $ 1,500.00Less:
Remuneration in employment at Burleigh
Bears Club (from 14 November 2007 for
six-and-a-half months) $ 39,530.00Less:
Employment at Southport Surf Club (from
1 June 2008 for five weeks) $ 8,653.00Damages $ 65,753.00
I was asked to exclude from that assessment the allowance of $200 per week payable under cl 3.2 because Mr Condren would not have been incurring the expenses referred to in that clause once his employment was terminated. However, as I have found, this allowance was effectively an increment to this salary and not intended to simply reimburse him for his expenses. Some allowance would have been necessary for the fact that expenses would not have been incurred. But the Club has not led evidence to show that his expenses were anything approaching $200 per week. Accordingly, an amount of $40 per week would have been a reasonable deduction.
The second car
Mr Condren’s case, as pleaded in para 9 of the amended statement of claim, is that he is entitled to this car pursuant to an oral agreement made with the Board of Directors in or shortly after January 2004. He pleads that it was agreed:
“that upon the termination of the lease agreement with respect to the car in or about November 2007, … all right, title and interest in the car would be transferred to the plaintiff, that the plaintiff was at liberty to sell the car and retain the sale proceeds therefrom, or otherwise deal with the car as he saw fit, and that the defendant would supply a further car to him pursuant to clause 3.5 of the said written contract.”
The agreement is said to have been made at first with Mr Muirhead in or about January 2004 and when subsequently communicated to members of the Board in the presence of Mr Condren, accepted by them. The reply and answer (by para 17(b)) responds to the Club’s pleaded case as to the proceeds of sale of the first car by saying that the monies were paid “in accordance with the oral agreement pleaded in para 9 of the amended statement of claim”. This is curious because the oral agreement there pleaded relates to the second car.
As noted already, Mr Condren’s evidence was that in about November or December 2003, he attended a Board meeting at which the directors were told of this agreement for the second car.[5] He said that Mr Muirhead asked the Board whether anybody opposed those arrangements and that there was no opposition. At the same time Mr Muirhead is said to have told the Board that he and Mr Condren had commenced discussions about a new employment contract. Accordingly, Mr Condren’s case is that there was this agreement for the ownership of the second car prior to the making of the 2004 contract. On 27 February 2004, Mr McFarlane wrote a letter to Mr Muirhead recommending an increase in Mr Condren’s salary to $125,000. Mr Condren said he discussed this with Mr Muirhead and Ms King, and said that he would be happy to accept the proposed salary of $125,000
“because the motor vehicle that had been provided to me was going to revert to my ownership at the end of the lease”.
It was after this that there was a Board meeting “held in or about late February … at which [the 2004 contract] was discussed.”
[5]See above at [16].
Mr Condren’s evidence was that at this February meeting, another director, Mr Middlemas, said words to the effect “Hang on; we don’t know what’s in the [2004] Contract”, and that in response, Mr Muirhead told the Board that Mr Condren “was to be paid $125,000 per annum plus a car, plus a mobile phone and paid accounts, plus medical benefits, plus a computer” and words to the effect that “it was otherwise the same as the previous contract.” So from Mr Condren’s evidence, any discussion at the Board meeting as to the terms of the 2004 contract was consistent with the terms of the document as signed. It was relevantly identical to the 1999 contract, because again the provision for a car was in terms that the Club would supply a car for personal use and pay the FBT and all running costs. Yet on Mr Condren’s case, there was an additional term of his contract of employment, by which not only would he have the use of this car during his employment, but also the car would be transferred to him at the end of the (supposed) four year lease, or if earlier, the termination of his employment, (in which case he would make the remaining payments). Just why this important term was not included within the written contract, if it was approved by the Board, is not explained.
Apart from its provision for the allowance of $200 per week, the 2004 contract accorded with the advice of Mr McFarlane. In his letter of 27 February 2004, Mr McFarlane wrote:
“With reference to your enquiry regarding a review of the level of remuneration for Mr. S Condren.
It is my opinion based on the length of excellent service that Mr Condren has provided to the Club as general manager for the last 15 years and the size of the Club, industry benchmarks indicate that $125,000.00 p.a. plus car, plus medical benefits, plus a computer is appropriate.”
Mr McFarlane’s advice did not refer to this alleged term for the ownership of the car. I do not accept that a recommendation for remuneration of a certain salary “plus car” should have been understood as providing for anything other than the personal use of a car during Mr Condren’s employment.
As already noted, Ms King’s evidence was that she recalled a meeting with Mr Condren, Mr McFarlane and Mr Muirhead in which Mr Condren said that he would accept the recommended salary “because his ownership of the car was included in the package”. To that extent her evidence supports that of Mr Condren on this issue. But Ms King said that after this meeting, Mr Muirhead said to her that the Board did not need to know everything about Mr Condren’s package and that the only real change from the 1999 contract was his annual salary. And upon her evidence, there was no discussion at a Board meeting as to Mr Condren’s proposed ownership of this second car.
Mr Chapman’s evidence was that the discussion of the 2004 contract at a meeting of the Board involved only Mr Muirhead saying that the plaintiff would be paid $125,000 per year “plus a car plus extras”. As noted already Ms Saxby thought that she recalled being told, in a Board meeting or otherwise, that this second car would become Mr Condren’s after four years. Mr Higgs disputed that there was any discussion at a Board meeting as to ownership of the second car and said that it was his understanding that the car was and always would be the Club’s vehicle.
I accept that something was said between Mr Condren, Mr Muirhead and perhaps Ms King, in about January or February 2004, to the effect that Mr Condren would have the second car as his own property at the end of the four years during which the Club was paying for it (under a chattel mortgage rather than a lease). That was consistent with the benefit which Mr Condren had recently received in respect of the first car. However, more probably than not, this proposed ownership of the second car was not put to and approved by the Board. The minutes of the meetings of directors of 25 January and 29 February 2004 contain no reference to the matter. Rather in the minutes of the February meeting this was recorded:
“Manager Steve Condren re wage was discussed by the committee and passed after it was explained by a financial advisor as suggested. It has been four years since his last rise. This brings him into a more reasonable wage but still on the low side in comparison to other managers running Clubs of the same size and takings. Same conditions as last contract.”
There is no explanation for the omission from the minutes of a reference to such an important term. And Mr Muirhead wished to have the Board understand that the terms were no different from the 1999 contract, apart from the amount of the salary, as the minutes record. It is unlikely that the Board would have approved this additional term of Mr Condren’s agreed remuneration when it was not within Mr McFarlane’s recommendation. And Mr McFarlane was unaware of this proposal, he said, until a conversation he had with Mr Muirhead late in 2004. Ultimately the only witness with a definite recollection of this being put to and approved by the Board is Mr Condren and I do not accept his evidence in that respect. I find that, the Board not having approved this proposal as to ownership of the second car, the Club did not become bound by it. Again, the remuneration of the manager was to be decided by the Board and not by Mr Muirhead, with or without Ms King.
As with the proceeds of the sale of the first car, Mr Condren must have known that Mr Muirhead had made this agreement without the approval of the Board. He must have known that the Board had approved no more than the remuneration package according to the 2004 contract, which was relevantly in the same terms as the 1999 contract which he had not thought to have provided any entitlement to ownership of a car.
It follows that the car, which is registered still in the Club’s name, remains in all respects the property of the Club. The Club pleads simply that Mr Condren has retained it and that the Club “paid the sum of $90,911.52 being the purchase price and interest payments …” From these facts the Club counterclaims for that sum of $90,911.52 plus interest. The basis for recovery of that sum is not established. Almost all of it must have been paid by the Club during the period of Mr Condren’s appointment, as a result of the Club’s contractual obligation to provide a car for his use.
There is no pleaded case for the return of the car to the Club. Ultimately, the Club submitted that there should be an award of damages for conversion. The argument for Mr Condren appeared to accept that if the Club established its ownership in all respects of the car, it could be awarded damages, but upon the basis of evidence tendered for Mr Condren that the current value of the car was in the range of $21,600 to $30,800. In their oral submissions, counsel for the Club sought to fasten upon the figure of $40,980, pleaded as the car’s value as at 31 January 2008 in the amended statement of claim, where Mr Condren claimed to have been wrongly deprived of the ownership of the car. On my findings, Mr Condren has not been entitled to the use of the car since the termination of his employment in October 2007 and he has converted possession of the car. I will allow damages in the sum of $25,000 consistently with the evidence tendered by Mr Condren. I will also allow interest upon that sum from 5 October 2007.
Conclusion
It is conceded that Mr Condren is entitled to outstanding annual leave and long service leave payments in the respective sums of $53,601.68 and $24,361.80, a total of $77,963.48. With the addition of interest at five per cent[6] that amounts to $87,871.34.
[6]Under s 47 of the Supreme Court Act1995 (Qld).
The Club is entitled to the sums of $28,636.37, with interest thereon of $9,247.15.[7], and $25,000, with interest thereon of $3,177.08[8], totalling $66,060.60. The respective liabilities should be set off, and there will be judgment for the plaintiff against the defendant in the sum of $21,810.74. I will hear the parties as to costs and any other order which should be made according to these reasons for judgment.
[7]At five per cent for 77.5 months being the approximate period from the date of payment to the date of judgment.
[8]At five per cent from the date of dismissal.
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