Derrick v Aboriginal Business Development Pty Ltd - [2004] WADC 244

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: DERRICK & ANOR -v- ABORIGINAL BUSINESS DEVELOPMENT PTY LTD [2004] WADC 244

CORAM: GROVES DCJ

HEARD: 10, 13 & 14 OCTOBER 2003

DELIVERED : 3 DECEMBER 2004

FILE NO/S: CIV 2354 of 2002

BETWEEN: PETER DERRICK
ROSEMARY ROSE
Plaintiffs
AND
ABORIGINAL BUSINESS DEVELOPMENT PTY LTD
Defendant

Catchwords:

Contracts - Terms of contract - Contract of employment - Frustration - Estoppel by conduct - Turns on own facts

Legislation:

Nil

Result:

Action dismissed

Representation:

Counsel:

Plaintiffs: Mr D P A Moen
Defendant: Mr C P Shanahan

Solicitors:

Plaintiffs: Naveen Pillay
Defendant: Butcher Paull & Calder

Case(s) referred to in judgment(s):

Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337
Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696
Re Continental C & G Rubber Co Pty Ltd (1919) 27 CLR 194
Scanlan's New Neon Ltd v Tooheys Ltd (1943) 67 CLR 169

Case(s) also cited:

Aurel Forras Pty Ltd v Graham Karp Developments Pty Ltd [1975] VR 202
Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641
Walton's Stores (Interstate) Limited v Maher (1988) 164 CLR 387

GROVES DCJ: The plaintiffs were employed by the defendant as the managers of the Marwuntu Store at Balgo. They now sue the defendant for loss of income and other benefits as a result of the claimed wrongful termination of the employment agreement. The defendant says that the termination of the plaintiffs' employment was effected by their own acts in that they abandoned their employment under the management agreement. The defendant relies on two affirmative defences in the alternative, namely:
(i)estoppel by conduct; and
(ii)frustration of the contract.

Background – facts not in dispute

The defendant was incorporated in 1996 to take over three programmes of the Aboriginal Economic Development Office, a government agency. The three programmes included the "Community Stores Programme". The Community Stores Programme involved the provision of management services to remote Aboriginal community stores.
When the defendant first began operations its staff were drawn from the Aboriginal Economic Development Office. Mr Brian Fitzpatrick ("Fitzpatrick") the managing director of the defendant during the material time had previously been general manager of the Aboriginal Economic Development Office before commencing his employment with the defendant at its inception in 1996.
When the defendant first began its operations in 1996 it provided managers to nine stores. In 1998 the defendant began to provide management services to the Marwuntu Store, the community store at Balgo. By September 1999 the defendant provided management services to 10 stores in remote aboriginal communities throughout Western Australia, including the Marwuntu Store.
The Wirrimanu Aboriginal Corporation ("Wirrimanu") represents the Balgo Aboriginal community.
The Marwuntu Store had been operated by Jarlu Pty Ltd, the commercial arm of Wirrimanu, prior to the defendant's involvement with the store.
At all material times, Jarlu Pty Ltd was subject to administration under a Deed of Company Arrangement. The Court appointed Administrator was Mr Nilant of Clout & Associates ("the Administrator").
The defendant first became involved in providing management services to the Marwuntu Store pursuant to a written agreement dated 11 August 1999 between Wirrimanu, Jarlu Pty Ltd and the Administrator ("the Management Agreement").
The plaintiffs, Mr Peter Derrick ("Derrick") and Ms Rosemary Rose ("Rose") are a de facto couple and have been since 1997. In September 1999 they were employed in the management and operation of road houses in the north west of Western Australia. In that month when they were working at the Roebuck Roadhouse just outside Broome, Derrick telephoned Fitzpatrick informing him that the plaintiffs were interested in working in remote Aboriginal communities and that they would like to work in a remote store if the opportunity became available. Fitzpatrick requested that the plaintiffs send their curriculum vitaes to him which they did on 28 September 1999.
Some time later, in either late October or early November, Fitzpatrick telephoned Derrick to advise that the defendant's then current managers of the Marwuntu Store, Graham and Sue Farmer ("Farmers") were leaving and the defendant was looking for someone to replace them as managers. Fitzpatrick requested that the plaintiffs go to the defendant's Turkey Creek Store to meet Trevor and Sandy Karosek to have an interview with them and to have a run down on the Stockmaster stock control computer system. The plaintiffs went to the Wungkul Store, Warmun otherwise known as the defendant's Turkey Creek Store, to be interviewed by Trevor and Sandy the then managers of that store and employees of the defendant. Following the interview Trevor telephoned Fitzpatrick and apparently informed him that the plaintiffs seemed suitable for the job. The telephone was handed to Derrick and there ensued discussions between he and Fitzpatrick as to the terms of engagement for the employment of the plaintiffs as managers of the Marwuntu Store. I will deal in more detail with the terms of engagement in the course of these reasons.
The plaintiffs travelled to Balgo on 6 November 1999 where they met the Farmers, the outgoing managers, who showed them around. On Derrick's evidence the plaintiffs basically started work on that day. On Fitzpatrick's evidence he had a further telephone discussion with Derrick on 11 November and thereafter confirmed the terms of engagement in a letter to the plaintiffs of the same date. Again, reference will be made to this conversation and the letter later in these reasons.
The plaintiffs successfully completed a three month probationary period whereupon their employment for the remainder of the term was confirmed and their joint salary increased.
In or about March 2000 Fitzpatrick telephoned Derrick and enquired of him if the plaintiffs would be prepared to transfer their employment to Poinciana Roadhouse. The plaintiffs indicated that they wanted to stay at Balgo.
On 31 March 2000 Fitzpatrick received a facsimile from Wirrimanu giving notice of termination of the Management Agreement "…with effect from close of business on Friday the 31^st March, 2000." Fitzpatrick faxed the letter to Derrick and they spoke about it by telephone. Fitzpatrick intimated that it was a legal problem he would sort out. In fact the defendant's solicitors by letter faxed to Wirrimanu on the same day denied any breach of the Management Agreement and pointed out that the notice purporting to terminate the agreement was not valid in that proper notice of any alleged breach had not been given in accordance with the provisions of the Management Agreement.
Later that day Rose was confronted in the store by the community coordinator, a Mr Rod Richardson ("Richardson") and two police officers. They demanded that the keys to the store be handed over. At this time Derrick was at the airport collecting provisions for the store. When he returned to the store Richardson and the police were still there. He refused to hand the keys over and stalled for time to enable him to contact Fitzpatrick to ascertain what was going on and to ascertain whether or not the situation was going to be resolved. Fitzpatrick suggested that a Mr Peter Grundy would fly into Balgo the next day to sort the matter out. Fitzpatrick instructed Derrick not to hand over the keys to the store. There was more to the discussion and again that will be dealt with later in these reasons.
The next morning, Saturday 1 April 2000, at about 9.15 am the store alarm sounded. Derrick went to investigate and it was apparent to him that Richardson had broken into the store through one of the doors near the store office. On his evidence Derrick said that when he approached Richardson he was told that the plaintiffs had until midnight on 1 April 2000 to remove themselves from the community. Derrick telephoned Fitzpatrick and discussed the situation with him. Grundy was contacted and told not to proceed to Balgo.
The plaintiffs hastily packed what they could and stored other property and left the community that day by the only road that was open and that was to Alice Springs. From Alice Springs Derrick had further telephone conversations with Fitzpatrick. During one such conversation on 6 April Fitzpatrick indicated that he could not see the defendant taking back the Marwuntu Store in the short term. Derrick apparently requested that the plaintiffs' wages and annual leave entitlements be made up and paid to them.
The defendant never resumed management of the Marwuntu Store. It subsequently took action against Wirrimanu for breach of the management agreement and those proceedings were subsequently settled in favour of the defendant.

Terms of the original contract of employment

A number of the terms of the plaintiffs' appointment are not in dispute. The following are common ground.
1.Insofar as the contract of employment between the plaintiffs and the defendant was evidenced in writing it is set out in the defendant's letter to the plaintiff dated 11 November 1999. That letter states:
"Dear Peter and Rose,
Marwuntu Store – Balgo
Following our phone interview today I am pleased to confirm your appointment as managers of the Marwuntu Store at Balgo commencing on the 10^th November 1999.
As discussed you will commence a three month probationary period on a combined salary of $72,000 P/A.
A vehicle allowance will be negotiated to cover the use of your private vehicle used on store business.
On satisfactory completion of the probation period, subject to acceptance by the Wirrimanu Aboriginal Corporation you will be offered an employment contract to manage the Marwuntu Store for a period of two years.
We look forward to a your success.
Yours sincerely,
Brian Fitzpatrick
Managing Director"
2.Insofar as the terms of appointment were oral it is admitted that:
(a)The plaintiffs would be jointly employed by the defendant as store managers of the Marwuntu Store at Balgo.
(b)The term of appointment would be for 24 months inclusive of the three months probationary period.
(c)There would be six weeks annual leave for each of the plaintiffs preferably in two three week brackets.
(d)Whilst the defendant did not make the admission in its defence it nevertheless concedes that the contract of employment also included the term that each plaintiff would be entitled to one return airfare per annum to either Perth or Kununurra from Balgo.

Issues in dispute

These pleas and admissions leave two alleged terms of the contract of employment in dispute namely:
1.that the defendant required managers to manage the store on a long term basis, and
2.that the combined salary would be $72,000 per annum plus a motor vehicle allowance of $50 per day.
As to the first of those issues the defendant accepts, albeit that the contention was not supported by any evidence, that it was seeking to provide managers to the Marwuntu Store to meet its contractual obligations to the Wirrimanu and that the plea is consistent with that object without being a term of the contract of employment.
The defendant admits that the plaintiffs' joint salary was $72,000 as evidenced by the letter. The only issue remaining in respect of the contract of employment up to the end of the probationary period is whether it included a "vehicle allowance at $50 per day". In dealing with that issue it is necessary to go back and consider the evidence insofar as the initial discussions between the parties are concerned.

Evidence regarding the vehicle allowance

First, there is an issue regarding whether Fitzpatrick mentioned or explained the contractual arrangements between the defendant and Wirrimanu and the nature of the defendant's contractual obligation to provide managers for the Marwuntu Store. On the plaintiffs' evidence‑in‑chief there was no mention in any of the discussions of the defendant's contractual obligation to Wirrimanu. In cross‑examination the following exchange occurred:
"I put to you that by 11 November 1999 Mr Fitzpatrick had explained to you the contractual relationship between Wirrimanu Aboriginal Corporation and ABD, the defendant?‑‑‑No.
And in explaining that to you he'd explained to you that ABD were required to provide managers to the Marwuntu Store?‑‑‑No."
However, later in cross‑examination the following was elicited from Derrick:
"Mr Derrick, is it your evidence that you were aware that there were contractual arrangements between Wirrimanu Aboriginal Corporation and ABD, at the time you saw this letter (7 December 1999)?‑‑‑Yes.
Had you been made aware of them previously by Mr Fitzpatrick?‑‑‑I knew, verbally, that there was an agreement for ABD to run the store.
When were you told that?‑‑‑It just came up in general discussion, that they had an agreement.
Would that have been the general discussions leading up to your employment at the Marwuntu Store?‑‑‑Not at Marwuntu.
When do you say that those discussions occurred?‑‑‑It was probably in the discussion at Turkey Creek.
So it is a fact, is it not, that Mr Fitzpatrick discussed these arrangements with you before you started work at Balgo?‑‑‑No, he only ‑‑‑
When do you say he told you that?‑‑‑I'm saying it possibly came up in conversation when we were at Warmun‑‑‑sorry at Turkey Creek.
Mr Derrick, what were you told about the management agreement when Mr Fitzpatrick spoke to you about it when you were at Turkey Creek?‑‑‑The only thing I can remember was that Brian told me they had an agreement to run the store. There was another name mentioned: I believe it was Jarlu, was it?
What did you understand Jarlu to relate to?‑‑‑Jarlu was something to do with the court Administrator to run Balgo community, that had been put into receivership…all I know is that ABD had an agreement to run the store.
What did he tell you about the management agreement at that time?‑‑‑That they had a contract to supply management of the store for a period of, I think it was 3 years plus some months or something at that time, and they were to supply managers and stock control and maintenance on the computer system. That's basically all I can remember.
I put it to you that when he explained that to you he also explained to you about the motor vehicle allowance and that would be paid by the store, under the management agreement and not by ABD?‑‑‑He said there would be a vehicle allowance when we were at Turkey Creek. It wasn't until after we arrived at Balgo and I spoke to Graham Farmer, then I questioned Brian Fitzpatrick about where the money was to come from.
So you questioned Brian Fitzpatrick about where the money was going to come from. What money?‑‑‑The money for the vehicle allowance.
You did that after you spoke to Graham Farmer. Is that right?‑‑‑That's correct.
What did Graham Farmer tell you that you made you seek to question Mr Fitzpatrick about the motor vehicle allowance?‑‑‑He said, 'You just pay yourself,' and that's why I questioned Brian Fitzpatrick about it.
Brian Fitzpatrick explained to you, did he not, that the monies were paid by the store and not by ABD?‑‑‑He said the money was to come out of the store account.
But the payments were made by the store and not by ABD?‑‑‑I say again, he told me that the money was to come out of the store account.
I put it to you that he told you that the monies were to come out of the store account and that the monies were to be paid by the store and not by ABD?‑‑‑Yes.
You accept that?‑‑‑Yes, I do."
It was common cause that Wirrimanu did not provide a vehicle for use by the store managers. Rather, the arrangement was to be that the plaintiffs would use their own vehicle for doing the necessary running around on store business. Nor is it in issue that Derrick received three payments of $1,500 on 13 December 1999, 11 January 2000 and 15 February 2000. A further payment of $1,500 was made to Rose's account on 13 March 2000. It was Derrick's evidence that these payments were the payments of motor vehicle allowance whilst employed at the Marwuntu Store and that despite the different number of days in different months the allowance remained the same, ie $1,500 per month. This is at variance with the plaintiff's pleaded case that the allowance was $50 per day.
Again, it was Derrick's evidence that the three payments made to his account were by cheque drawn on the Marwuntu Store account. Cheques on this account had to be countersigned by a member of the Wirrimanu. The Marwuntu Store account was controlled by Derrick and the Wirrimanu. The cheques did not require any authorisation or counter signature by any officer of the defendant. Derrick agreed that the defendant had never paid him a motor vehicle allowance. The arrangement for these payments in this manner contrasts with the arrangement whereby the plaintiff's salary was paid by the defendant by way of electronic transfer direct to their bank accounts.
There was no evidence as to what, if any, arrangement or discussion there was as between the plaintiffs and Wirrimanu at the time when the cheques were provided.
It is to be noted that the Management Agreement, at cl 8.1 does provide that Wirrimanu "must pay for the provision of a motor vehicle for the Manager…"
In cross‑examination Rose acknowledged that there had been discussion about a motor vehicle allowance prior to the plaintiffs going to Balgo and that they had discussed this matter with the Farmers. She denied that the Farmers had said who would pay the allowance. She acknowledged also that insofar as the arrangements as between the parties were concerned Derrick was the negotiator.
When asked about "a vehicle" in his evidence‑in‑chief Derrick stated:
"No we were to – originally we were told we would get a vehicle allowance which was $50 per day. It was not expressed at the time where that money was to come from. I just assumed it was to be paid by…(the defendant)…I was later told when I spoke to Brian Fitzpatrick that we were to take the money from the Wirrimanu Store, either from the takings or from the store account…"
In the statement of claim the plaintiffs plead that the negotiation in respect of the motor vehicle allowance was conducted in the course of a telephonic conversation between Fitzpatrick and Derrick on or about 11 November 1999. It is pleaded that on that date the vehicle allowance was negotiated at $50 per day.
It is of some import that the plaintiffs plead that insofar as their agreement with the defendant was in writing it was contained in the letter dated 11 November 1999 from the defendant to the plaintiffs. Both of the plaintiffs gave evidence that they had never seen "…this document", ie the letter, until the day before they each gave evidence. It is the case as the Court file evidences that the original statement of claim filed 23 August 2002 pleaded the letter. That was prior to discovery of documents which was provided by the defendant's informal list of documents filed 1 April 2003. The letter is addressed to the plaintiffs "c/- Wungkul Store, Warmun (by Fax)". They had gone there for interview with the Karoseks. By 11 November however they were at Balgo. It would be understandable in those circumstances that they may not have received the letter. However, there was no attempt made by the plaintiffs to explain how reference to the letter came to be pleaded when, on their oath, they both said that they had never seen the letter until days before giving their evidence. The only inference is that they were aware of the content of the letter and the evidence of both, in that respect, is untruthful.
In that context it is significant that the penultimate paragraph of the letter states:
"On satisfactory completion of the probation period, subject to acceptance by the Wirrimanu Aboriginal Corporation you will be offered an employment contract to manage the Marwuntu Store for a period of 2 years."

It is open to the inference being drawn that had the plaintiffs acknowledged that they had notice of this condition, ie acceptance by Wirrimanu, that would have been prejudicial to their case insofar as their knowledge of a contractual arrangement between the defendant and the Wirrimanu is concerned. They each initially denied any such knowledge.
The letter also states:
"A vehicle allowance will be negotiated to cover the use of your private vehicle used on store business."
That statement in the letter prepared after the telephone conversation between Fitzpatrick and Derrick on 11 November 1999 is in conflict with Derrick's evidence that the sum of $50 per day allowance had been agreed on that date. The wording in the letter clearly states that the matter of a vehicle allowance was still to be negotiated. No agreement had been arrived at. Consistent with Fitzpatrick's evidence it might be understood that it was a matter for Derrick to negotiate the vehicle allowance with Wirrimanu. After his discussion with Farmer at Balgo and the fact that payments for vehicle allowance were drawn by Wirrimanu on the store account weighs against the plaintiff's assertion that the allowance was to be part of their salary package.
Furthermore, it was Derrick's evidence that he had no recollection of the telephone conversation with Fitzpatrick on 11 November 1999. As best he could do was acknowledge that there may have been a telephone conversation on that day. I find his recollection to be unreliable insofar as arrangements for the vehicle allowance are concerned. It is not consistent with contemporaneous correspondence and nor is his assertion that it was part of the salary package consistent with the arrangements whereby he was paid the vehicle allowance. Nor is it consistent with cl 8.1 of the Management Agreement and Derrick was aware, in general terms at least, that the defendant had such a contractual arrangement with Wirrimanu.
There is no assertion made by the plaintiffs that the Wirrimanu acted as the defendant's agent in paying the motor vehicle allowance to the plaintiffs.
Neither Derrick nor Rose disclosed receipt of the money by way of motor vehicle allowance in their income tax returns. Had it been part of their salary package with the defendant then presumably it would have been declared along with their other income. It was not.
In all the circumstances I conclude that it was not a term of the plaintiffs' employment contract that they were to receive from the defendant an allowance of $50 per day for a motor vehicle allowance.

Terms of renegotiated contract

It was common ground between the parties that the terms of the employment contract were varied upon satisfactory completion of the probationary period. It was this renegotiated contract that was in place when the Wirrimanu retook possession of the Marwuntu Store on 1 April 2000.
There is a dispute as to the terms of the renegotiated contract. By letter dated 22 February 2000 Fitzpatrick advised the plaintiffs, so far as is relevant as follows:
"We confirm that you have completed your three months probationary period of employment on 11 February 2000. We consider your performance to be satisfactory but advise that Rod Richardson the Administrator of Wirrimanu Aboriginal Corporation does not agree with this assessment.
Your combined salary is increased to $76,000 per year effective from 14 February 2000.
. . .
We are finalising your contract of employment as the managers, Marwuntu Store."
Derrick gave evidence that on a number of occasions he requested the contract of employment, however none was forthcoming. It was Derrick's evidence that in response to the letter of 22 February the plaintiffs made a counter offer to Fitzpatrick "…for a salary of $90,000 inclusive of motor vehicle allowance." Here again the reliability of Derrick's evidence is called into question. On the one hand it was his evidence that the original contract was $72,000 in joint salary plus a motor vehicle allowance of (365 x $50 per day) $18,250, a total of $90,250. If that was the case (which I do not accept) then what the plaintiffs are contending is that they were making a counter offer for a lesser total sum (salary plus motor vehicle allowance). That is hardly a credible proposition given that the defendant had notified an increase of salary. Again, applying the plaintiffs' logic if salary was increased to $76,000 plus a motor vehicle allowance of $18,250 makes a total of $94,250. Again, that is more than the plaintiffs' purported counter offer.
More than that, the plaintiffs, in their pleading and on Derrick's evidence, contend that the renegotiated salary "would be $78,000 plus a motor vehicle allowance of $50 per day." That would make a total package of $96,250. Again, that is substantially more than the purported counter offer made by them. It is a totally illogical proposition for which the plaintiffs contend. Why would they make a counter offer for a lesser sum than that for which they contend was the renegotiated agreement? Conversely, would a commercial operator such as the defendant reject an offer of $90,000 so it could pay $96,250 for the same services? I think not.
The evidence of Rose initially was that the renegotiated salary was $76,000. Later, it was her evidence‑in‑chief that the renegotiated salary was $78,000. In cross‑examination however, she agreed that the renegotiated salary was $76,000 not $78,000. Thus, it was only Derrick's evidence which supported a renegotiated salary of $78,000 which evidence for the reasons outlined I reject. I find the evidence of the plaintiffs on this aspect not credible at all.
Verification that the joint salary for the renegotiated contract was $76,000 per annum can be tested in another way. The plaintiffs were subsequently paid up to 31 March 2000. The pay advice of Rose (exhibit 22) states her gross weekly rate as $730.77. That equates to $38,000 gross per annum and when doubled for Derrick's half of the joint salary equals $76,000 per annum.
There was no evidence of complaint being made to the defendant's accountant Ms Louise Crump regarding her calculation of the last salary payment to Derrick and Rose.
Insofar as the motor vehicle allowance is concerned, it is significant that there was no mention made of it in the letter of 22 February. That would suggest too that it was no part of employment contract between the parties.
For the foregoing reasons it is my finding that the plaintiffs' joint salary renegotiated was $76,000 per annum, and that the claim for a motor vehicle allowance was not part of their salary package. Rather, as I have earlier found that was a matter as between the plaintiffs and the Wirrimanu.
Therefore, if the defendant was required to perform the contract after 1 April 2000 then the defendant's only contractual obligation related to the joint salary of $76,000 or $38,000 per annum for each plaintiff. The relevant period would be from 1 April 2000 until the end of their contract on 11 November 2001 being 274 days in 2000 and 315 days in 2001 (589 days). Thus the maximum amount to which the defendant would be liable to both plaintiffs in the event that the contract was enforcible after 1 April 2000 would be 589/365 x $76,000 ‑ $75,070 (income earned elsewhere) = $47,571.

The defendant's affirmative defences

Whether the plaintiffs are entitled to the sum of $47,571 depends on whether the defendant owed the plaintiffs any contractual obligations pursuant to the renegotiated contract after 1 April 2000. The defendant relies on two affirmative defences in the alternative:
1.Estoppel by conduct, and
2.Frustration of the contract.

Estoppel by conduct

By its defence the defendant pleads:
"13.The defendant…says that the termination of the plaintiffs' employment under the management agreement was effected by their own acts and not anything done or said by or on behalf of the defendant.
14.The defendant…says that the plaintiffs are estopped by their conduct from alleging that the defendant terminated their employment under the management agreement.
PARTICULARS OF CONDUCT
AThe first named plaintiff (Derrick), acting on behalf of both plaintiffs, telephoned Ms Louise Crump, an employee of the defendant, on or about 7 April 2000 and asked Ms Crump to prepare the plaintiff's final pay, being the plaintiffs' outstanding entitlements under the management agreement at that date;
BThe defendant paid the plaintiffs their entitlement under the management agreement calculated by Ms Crump;
CAbsent these proceedings the plaintiffs have never queried the amount paid by the defendant to the plaintiffs pursuant to paragraphs 14A and 14B herein;
DThe plaintiffs by their actions pleaded at paragraph 14A and 14B and their inaction pleaded at paragraph 14C herein induced the defendant to accept and rely upon the plaintiffs' termination of their employment under the management agreement;
EWere the plaintiffs now permitted to allege the defendant terminated their employment under the management agreement the defendant would suffer detriment in that the defendant may (which is denied) be liable to pay the plaintiffs, or either of them, further amounts in respect of legal costs, interest and/or damages."
The evidence as to the circumstances in which the plaintiffs departed Balgo on 1 April 2000 is somewhat mixed. It is the fact that they did depart on that day.
Derrick's evidence was that when he spoke to Fitzpatrick on the afternoon of 31 March 2000 it was left that Peter Grundy would arrive in Balgo next day apparently with authority to deal with the purported termination. He was told by Fitzpatrick that under no circumstances should the plaintiffs hand over the keys to the store. There was no discussion as to the plaintiffs' employment situation at this time. Derrick went to the police station and informed Constable Beard why he would not be handing over the keys and also saw Richardson similarly informing him and advising that Peter Grundy was arriving next day. Richardson apparently responded that there would be no point in the defendant sending anyone because they would not be welcome and would have to find their own way out. Derrick conveyed that information to Fitzpatrick who indicated he would contact Grundy and cancel his flight out to Balgo.
Next morning, Saturday 1 April at about 9.15 am, the store alarm was activated and when Derrick went to investigate his approach to the store was blocked by police officers. Richardson came out of the store and advised Derrick that he had taken control of the store. Derrick sought acknowledgment that he (Derrick) had not given the keys to the store to Derrick and that he had broken into the store. Richardson's response was that he had taken control and gave Derrick the ultimatum that he had until midnight to get out of community. Derrick telephoned Fitzpatrick and reported the situation to him. He informed him that the plaintiffs had been given an ultimatum to leave. Fitzpatrick reiterated in that telephone conversation that he wanted the plaintiffs to remain at Balgo. In contrast to that Derrick said that Fitzpatrick suggested he go to the Mowen community, however that was not an option as all roads out other than to Alice Springs were flooded. Derrick advised Fitzpatrick that he would contact him from Alice Springs. Again on that occasion there was no discussion about the plaintiffs' continued employment at the community. It was Fitzpatrick's evidence that Derrick said that he was determined to leave and would be leaving. He also spoke to Rose and told her that he wanted both of the plaintiffs to remain at Balgo. Her response was that she was happy to stay but that Derrick was determined to leave and that he had decided that they would leave. In any event the plaintiffs departed Balgo at about 4.00‑4.30 pm that afternoon.
Derrick telephoned Fitzpatrick from Alice Springs. Fitzpatrick requested that he prepare a statement as to the events which had happened at Balgo on 31 March and 1 April. There was also discussion as to the prospects of the defendant regaining management of the store. On Derrick's account Fitzpatrick said that he could not see the defendant taking the store back in the short term. Derrick's response was to enquire if nothing was resolved in the short term whether the plaintiffs could take their annual leave. Fitzpatrick's evidence was that having regard to the circumstances of the plaintiffs' departure it was unlikely they would regain management of the store. To that Derrick had responded that if they were unable to regain management of the store they (the plaintiffs) wanted to be paid up. From this Fitzpatrick understood that the plaintiffs were resigning their employment. In conflict with that evidence Derrick said that in response to his enquiry about taking annual leave that Fitzpatrick said that their employment was terminated as from 31 March. That was the first time that he became aware of any suggestion as to their employment being terminated. He said no reason was given for termination. Fitzpatrick denied that he terminated the plaintiffs' employment as Derrick suggested. The end result of that telephone conversation was that Derrick was transferred to Ms Louise Crump the defendant's administration manager with whom he discussed their pay entitlements. It was her evidence that when she spoke to Derrick on Thursday 6 April that he asked her when she would "…be banking their termination pay." The next day the plaintiffs accrued entitlements were banked to their respective accounts which comprised their salary to 31 March 2000, adjusted back pay and pro rata annual leave entitlement to 31 March.
Thereafter there followed an exchange of correspondence. By letter dated 10 April Derrick wrote to Fitzpatrick informing that:
"…we intend to hold you to our contract for 21 months employment from 10/02/00 at the agreed salary plus vehicle allowance.
Please supply a copy of the said contract by return post, to reach us no later than Friday 14/04/00."
Fitzpatrick responded by letter dated 14 April 2000 rejecting Derrick's assertion that the defendant remained liable to the plaintiffs for the balance of their contractual term. The letter continued:
"There are a number of reasons for this. Firstly, whilst the terms of the agreement between yourselves and ABD were never committed to writing (although I acknowledge that that was certainly the intent), it is implicit in any agreement between you and ABD that your appointment was subject to ABD retaining the right to manage the store. Whether that right has been withdrawn rightly or wrongly the fact remains that at the present ABD is not in a position to exercise management rights over the store.
Secondly, your actions in leaving Balgo contrary to my instructions can only be interpreted as an election to resign your positions, which resignation we have reluctantly accepted.
This interpretation is reinforced by the fact that in calculating your final payments all contractual entitlements normally included upon termination of employment have been dealt with. You accepted payment on this basis."
Thus it will be seen that there is a conflict of evidence surrounding the plaintiffs' departure from Balgo and the subsequent discussion between Derrick and Fitzpatrick on 6 April. On balance however I incline to Fitzpatrick's account. The plaintiffs left Balgo despite Fitzpatrick urging both of them to remain there. It was the plaintiffs' decision to leave and they went against the instruction given to them by Fitzpatrick. Whilst they may have felt compelled to leave given Richardson's ultimatum it was nevertheless their own decision that they did leave. Ms Crump's evidence regarding Derrick requesting termination pay be made up is also confirmatory that he viewed or regarded his employment as at an end which is consistent with Fitzpatrick's evidence. I have recorded earlier in these reasons where I have found that the plaintiffs' evidence is unreliable. That being the case I cannot have confidence as to the reliability of Derrick's evidence insofar as these matters are concerned. The onus is on the plaintiffs to satisfy me, on the balance of probabilities, that the circumstances were as they contended. That onus has not been satisfied. In the circumstances I am left to conclude that in fact the plaintiffs did abandon their employment and did accept that their employment was at an end by requesting and receiving their termination payment.

Frustration of the contract

As to frustration the defendant pleads:
"16.Further or alternatively, performance of the management agreement became, without any fault on the part of the defendant impossible and the management agreement was frustrated and the defendant is thereby discharged from performance of it.
PARTICULARS
AOn or about 1 April 2000 Wirrimanu by its employee, officer or agent Mr Rod Richardson, wrongfully and in breach of the Wirrimanu agreement hereof above, re‑took possession of the Marwuntu Store and thereafter denied the defendant access to the Marwuntu store.
BSuch denial of access continues to date and in any event, continued beyond the date upon which the management agreement would otherwise have expired.
CThe defendant repeats paragraph 14 herein, and
Din such circumstances the defendant was prevented from performing its obligations under the Wirrimanu agreement in respect of managing the Marwuntu store…"
The first notification which the defendant received from Wirrimanu purporting to terminate the Management Agreement was by facsimile dated 31 March 2000 (exhibit 5C). The defendant took legal advice and its solicitors responded by facsimile on the same day (exhibit 18). The response was to point out, inter alia, that the purported termination was not valid because notice of termination in terms of the Management Agreement had not been given. That did not deter the community coordinator acting on behalf of Wirrimanu from taking possession of the Marwuntu Store on the morning of Saturday 1 April.
The defendant subsequently sued Wirrimanu for breach of contract and that action was settled in the defendant's favour. It is abundantly clear (at least on the information before this Court) that Wirrimanu did not act in accordance with the terms of the Management Agreement in re‑taking possession of the store as it did. As it was the defendant was never allowed back into possession/management of the store and could not have performed its obligations in terms of its agreement with the plaintiffs.
I am satisfied for the reasons stated above that the plaintiffs were at least when they arrived at Balgo if not before, aware that the defendant managed the Marwuntu Store pursuant to an agreement with the community. Self‑evident in knowing that to be the case would be the fact that the plaintiffs' employment agreement with the defendant was dependent upon that Management Agreement running its course.
The re‑taking of possession by the Wirrimanu in the manner which it did was clearly unexpected. The defendant endeavoured to avoid that situation, first by responding by its solicitors' letter, and secondly arranging for Peter Grundy to arrive at Balgo the next day. As it was the unexpected events overtook all that the defendant might have done or hoped to achieve. Thus, the re‑taking of possession of the Marwuntu Store by Wirrimanu ended any prospect of performance of the contract of employment.
The defendant was not responsible for the manner in which the Management Agreement was terminated by Wirrimanu.
From the authorities the following legal principles touching on frustration of contract might be distilled insofar as relevant to this case as follows:
Frustration of a contract occurs when a supervening and unanticipated event renders some or all of the obligations thereunder incapable of being performed: Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 per Mason J at p 357, Aickin J at p 377, with whom Stephen and Wilson JJ agreed at p 344 and p 392 respectively.

In respect of the nature of the supervening and unanticipated event it must be, "such a change in the significance of the obligation that the thing undertaken would if performed be a different thing than that contracted for": Codelfa (supra) per Mason J at p 357.
What is required is fundamental or radical difference between the new situation and that contemplated by the contract, so that performance in the new situation would be a different thing than that contracted for: Codelfa (supra) per Mason J at p 360 and Aickin J at p 381.
In assessing whether there has been a change in the situation from that contemplated by the contract (of the type required to establish a frustration of that contract) the courts will consider the extent to which a conclusion that the contract has been frustrated would result in serious inequality of exchange: Scanlan's New Neon Ltd v Tooheys Ltd (1943) 67 CLR 169.
The "data for decision are on the one hand, the terms and construction of the contract read in the light of the existing circumstances, and on the other hand events that have occurred: see Mason J in Codelfa (supra) at p 359 adopting Lord Wright's speech in Denny Mott & Dickson v James B Fraser & Co Ltd [1944] AC 265 at pp 274‑275.
The question whether a contract has been frustrated can be answered only after a close investigation of the particular circumstances of the case: see Denny (supra) per Lord Wright at p 276.
The Court intervenes to provide a fair and just solution to the unexpected events that have overtaken the parties since the contract was formed. Lord Radcliffe in Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696 described the Court's role at pp 728‑729 in the following terms:
"By this time it might seem that the parties themselves have become so far disembodied spirits that their actual persons should be allowed to rest in peace. In their place rises the figure of the fair and reasonable man. And the spokesman of the fair and reasonable man, who represents after all no more than the anthropomorphic conception of justice, is and must be the Court itself."
Frustration terminates the contract automatically but only prospectively: Re Continental C & G Rubber Co Pty Ltd (1919) 27 CLR 194. The time of termination is fixed as that being the time when the frustrating event occurred. Termination is prospective from that time: "As regards further liability – ie liability not then actually accrued and enforcible – the contract is at an end."
Having regard to the events which occurred and the manner in which they occurred I am satisfied to the requisite standard that the employment agreement as between the plaintiffs and the defendant was frustrated. The unexpected, and in my view, wrongful re‑taking of possession of the Marwuntu Store by the Wirrimanu ended any prospect of performance of the contract of employment. That is, there was a cessation of a state of things going to the root of the contract and essential to its performance.

Conclusion

I conclude therefore that the defendant did not owe the plaintiffs any contractual obligations pursuant to the renegotiated contract after 1 April 2000.
Accordingly, the plaintiff's action must be dismissed.