Esanda Finance Corporation v Kenghington No. SCGRG 93/33 Judgment No. 3962 Number of Pages 6 Contracts General Contractual Principles - [1993] SASC 3962

COURT IN THE SUPREME COURT OF SOUTH AUSTRALIA PRIOR J

CWDS
Contracts - general contractual principles - Construction and interpretation of contracts - contract of comployment and redundancy policy - whether respondent's position was "materially or significantly downgraded" or responsibilities "materially diminished" - damages - appeal - no clear offer of position higher than that at which respondent worked - appeal allowed.

HRNG ADELAIDE, 12 May 1993 #DATE 21:5:1993
Counsel for appellant:     Mr M. Evans
Solicitors for appellant:    Finlaysons
Counsel for respondent:     Mr T. Bourne
Solicitors for respondent: Stanley and Partners

ORDER
Appeal allowed.

JUDGE1 PRIOR J The respondent successfully sued the appellant for $14,781.18 damages. He had been employed by the appellant from September 1989 to March 1990 when he resigned. The appellant acquired or took over the business of Mercantile Credits Ltd at the end of April 1989. The respondent was then an employee of Mercantile Credits Limited. In the early part of 1989, he was acting as a Branch Manager. 2. It is admitted that around the takeover date of Mercantile by Esanda, employees of Mercantile were sent a document headed, "Intentions of Esanda Finance Corporation to the continuing business of Mercantile Credit Limited (MCL)". Within that document were a number of paragraphs relied upon in these proceedings. Two particular paragraphs provided:-
    "Inevitably there will not be suitable postings for all of
    M.C.L.'s present employees. However, because of ESANDA's size,
    we have substantial ability to absorb staff into vacancies as
    and when they arise within our own workforce. Where possible,
    particularly at the senior level, we will plan the integration
    so that staff for whom we do not have continuing employment
    opportunities will have ample notice, and therefore ability to
    properly plan their own redeployment. As set out in the draft
    share sale deed ESANDA is committed to retention of the existing
    M.C.L. redundancy policy, save only for the qualification that
    it does not require ESANDA to continue with these redundancy
    terms for staff once they have transferred to ESANDA's employ." 3. Under the respondent's contract of employment with Mercantile he had the benefit of a redundancy policy providing certain rights to employees including the right to resign and obtain a benefit in certain circumstances. Those circumstances included "a material or significant downgrading" by the employer of an employee's position or where an employee's responsibilities were "materially diminished" by the Mercantile Credits Group. 4. After Esanda took over Mercantile in April 1989, the respondent remained as a Branch Manager in Townsville for some time. On 24 July 1989 he received a written offer of employment from the appellant. The respondent accepted that offer. The letter inviting the respondent to "formally join Esanda" provided information. That information included two particular statements:-
    "1. The position we offer is a senior role on our relief staff
    in the Commercial Finance Unit. This is a temporary position
    pending placement in a permanent posting as soon as suitable
    opportunity arises. The job level we see as suitable to you
    having regard to…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

AGLC: Esanda Finance Corporation v Kenghington No. SCGRG 93/33 Judgment No. 3962 Number of Pages 6 Contracts General Contractual Principles [1993] SASC 3962
Case: [1993] SASC 3962
Decision Date: 21 May 1993

CaseChat Overview and Summary

In the Supreme Court of South Australia, Esanda Finance Corporation appealed against the decision of a magistrate who had awarded the respondent, Kenghington, damages of $14,781.18. The dispute centered around the interpretation of the redundancy policy and the respondent's employment contract after Esanda took over Mercantile Credits Ltd. Esanda had assured the respondent that he would be offered a Level 4 position upon joining Esanda, but he was instead placed in a Level 3 position as a Finance Consultant. The respondent claimed that this constituted a significant downgrading of his responsibilities, entitling him to redundancy benefits.

The key legal issues involved determining whether the respondent's position was materially or significantly downgraded, or his responsibilities materially diminished, under Esanda's employment, and whether this triggered the redundancy policy. The court had to assess whether the respondent's acceptance of a Level 3 position negated his claim for redundancy benefits and if his resignation was voluntary under the redundancy policy. The appeal hinged on whether the respondent had indeed been downgraded or if his resignation was voluntary as defined under the policy.

The court found that the respondent's acceptance of a Level 3 position did not preclude him from claiming redundancy benefits if he could prove a material or significant downgrading of his position within Esanda. However, the court concluded that there was no material or significant downgrading of the respondent's position within Esanda. The prospective opinion expressed in the offer of employment regarding a suitable Level 4 position did not translate into a downgrading or material diminution within the redundancy policy. The court held that the respondent's resignation was not due to a downgrading or material diminution within Esanda. Consequently, the appeal was allowed, and judgment was entered for the defendant.

Orders