Gillies v Downer EDI Ltd

[2013] HCATrans 81

[2013] HCATrans 081

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney   No S326 of 2012

B e t w e e n -

STEPHEN JOHN GILLIES

Applicant

and

DOWNER EDI LTD (ACN 003 872 848)

Respondent

Application for special leave to appeal

FRENCH CJ
KIEFEL J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 12 APRIL 2013, AT 9.34 AM

Copyright in the High Court of Australia

MR D.L. WILLIAMS, SC:   May it please the Court, I appear with my learned friend, MR R.C. BEASLEY, SC, for the applicant.  (instructed by DibbsBarker Lawyers)

MR D.F. JACKSON, QC:   If the Court pleases, I appear with my learned friend, MR J.C. GILES, for the respondent.  (instructed by Corrs Chambers Westgarth Lawyers)

FRENCH CJ:   Yes, Mr Williams.

MR WILLIAMS:  In our submission, this matter is deserving of a grant of special leave on two bases:  the first being the proper scope and application of the principle in Shepherd v Felt and Textiles and the second being the proper approach to misconduct warranting summary dismissal.  As to the first of those matters, the Shepherd matter ‑ ‑ ‑

FRENCH CJ:   Does the viability of the first point depend upon your succeeding on the construction issue in respect of clause 4.3?

MR WILLIAMS:   No.  Could I put it this way?  The Shepherd point has been used in a very unusual way in the construction point.  The way the President seemed to have reasoned is that the Shepherd principle involved – or there was an extension to the Shepherd principle of some sort, though it is a little difficult to identify precisely what it is – but we would submit that whatever that extension was it did not turn the principle on its head so that it did not involve the necessity for a matter of justification to be involved.  The principle involves justifying a termination on a different ground whereas what we had here is the contractual termination and the question of whether the ‑ ‑ ‑

FRENCH CJ:   Well, you say, one kind of termination cannot be converted retroactively into another kind of termination.

MR WILLIAMS:   Precisely, yes.  As the Court of Appeal in England has held in Cavenagh and as the Victorian Supreme Court has held, it is a little difficult to work out precisely how that process occurred in the construction argument, but it is to be found in the President’s judgment commencing at about page 143 of the application book where his Honour commences to deal with the matter. 

He, first of all, refers to the relevant provision in paragraph 128 on application book 143.  Then he refers to the principle.  At 137, after having considered that there could be a limitation on the principle, or that – sorry I could put that better.  His Honour seems to take the view that the submissions that we were making, namely, that the…..only be utilised when it was an issue of justification at stake, was an unwarranted limitation upon the principle.

His Honour then set out the principle as restated in Sunbird at paragraph 137.  Your Honours will still see that the word “justified” appears.  Then, after referring in paragraph 140 to the fact that there was an issue of construction concerning the word “effected”, his Honour goes on to deal with that matter of construction in 143 as saying:

Clause 4.3 should be construed both in the context of the common law, including the principle in Shepherd v Felt and Textiles, and in accordance with honest commercial common sense.

That led his Honour, in 144, to say that:

Clause 4.3 should be construed where it uses the word “effected” as including in its meaning effected as a matter of law, that is, by reference to the legally available support or justification for the termination that was effected. 

He then repeats that statement, perhaps in an abbreviated form, at application book 149, point 2:

“effected” must be wide enough to include effected in law as justified.

FRENCH CJ:   He agrees with the textual analysis of Justice Meagher, too, does he not?

MR WILLIAMS:   He does and I will come to Justice Meagher separately.  But, just pausing there, if we go back to the clause that is being interpreted, it is to be found at page ‑ ‑ ‑

FRENCH CJ:   I think it is 83.

MR WILLIAMS:   Yes, thank you, page 83 of the judgment.  It commences at 83 – the actual paragraph that we are talking about is clause 4.3 on the following page:

The termination payments referred to in this Clause 4 will not be payable in any case where the termination is effected under Clause 4.1(c) due to your misconduct or fraudulent activity.

The construction that the Court of Appeal has adopted involves reading into that clause the following words after clause 4.1(c):  “or was capable of being effected under clause 4.1(c)”.  That is the effect of the construction that the Court of Appeal has given the clause.

Now, if one goes back to see how it is that one has arrived at that interpretation, back to pages 148 and 149 of the application book seeks to identify how it is that the Court of Appeal has said that the word “effected” should be interpreted and then plug that interpretation into the paragraph it just does not work.  If one goes to the formulation in paragraph 144, “effected” means:

effected as a matter of law, that is, by reference to the legally available support or justification –

It goes back to clause 4.3 and ‑ ‑ ‑

FRENCH CJ:   To read it as given effect.

MR WILLIAMS:   Yes, effected or capable of being effected, which is not what it says.  The phrase “effected under clause 4.1(c)” is a matter of ordinary English expression and the court seems to have been driven to the ‑ ‑ ‑

FRENCH CJ:   Well, it ends up being a matter of contested construction of a particular provision of a contract, does it not?

MR WILLIAMS:   It does.

FRENCH CJ:   Is there a special leave issue lurking there?

MR WILLIAMS:   There is because of the essential importance to that question of construction of the manner in which the court interpreted the principle in Shepherd because the two other decisions – that of the Victorian Supreme Court and that of the English Court of Appeal – would not permit a construction of that nature to be given to the principle. In other words, it would not permit that principle to be applied, or deployed, in such a fashion. That is because - your Honours will see in the judgment of the President at 133 the quotation from Justice Vickery in Hodgson v Amcor:

the Shepherd principle in its broader form, in my opinion, cannot be applied, in effect, to convert a termination undertaken on one basis, namely a contractual termination in this case, to a termination on another basis, namely a summary dismissal.

To like effect is the English Court of Appeal’s decision in Cavenagh which is cited at some length in the Court of Appeal’s judgments.  Can I just give your Honours some references to Cavenagh and why the Cavenagh principle is quite contrary to the Court of Appeal’s decision – Cavenagh v William Evans Ltd (2013) 1 WLR 238. The issue in that case was whether a company could terminate on one basis and then rely on later discovered misconduct to avoid the consequences of the contractual obligations that arose if termination occurred in such a fashion.

At paragraph 36 on page 245, Lord Justice Mummery made the obvious point that if one terminates in a particular way there is no escaping that fact – and the fact that on that date the company purported to exercise a contractual power to terminate the service agreement without notice but pay in lieu and that the company agreed to pay it.  In other words, what happened is a debt arises; a contractual entitlement arises if one terminates in a particular way.  Similarly, halfway down the page at point E:

In this case the company was not seeking in the proceedings to justify its dismissal of Mr Cavenagh.  There was no dispute that his appointment was terminated summarily . . . and in a fashion that was lawful:  it was not a prima facie wrongful act, which the company had to justify by evidence of breach of duty.  The consequence of the lawful termination was that the company became contractually bound to Mr Cavenagh for pay in lieu.

To like effect are the statements of his Lordship at paragraphs 42 and 43 and Lord Justice Tomlinson at paragraphs 54 and 55, which I will not take your Honours to, but they are to the same effect.

Now, the effect of what the Court of Appeal has done in this case is to ignore the proper basis upon which the Shepherd v Felt and Textiles principle has been enunciated, namely, the justification of conduct which was subsequently called into question by reliance on matters that were not known about at the time.  Instead, because it perceived that there was some sort of business reason to interpret the plain words in another way, it has given a tortured meaning to the word “effected”. 

What it has said is “effected in law”, but when one looks at the clause itself, tries to plug that definition or that extended meaning into the clause itself, it just does not work.  What it requires is the reading into the clause of a different concept, namely, not only “effected under clause 4.1(c)” but “or capable of being effected under clause 4.1(c)”.  That is not an appropriate exercise of interpretation of these words.

FRENCH CJ:   So let us suppose somebody terminates under a provision of this kind with pay in lieu of notice on loss of confidence grounds – no ground has to be stated – and it turns out later and before benefits are paid that the terminated employee has stolen a substantial amount of money from the company.  The benefits are still payable?

MR WILLIAMS:   If the company chooses to terminate pursuant to a contractual right, yes.  If the termination occurs pursuant to a contractual right which gives rise to a contractual obligation ‑ ‑ ‑

FRENCH CJ:   There is a contractual right in any event, is there not?  Termination on the grounds of misconduct is a contractual right.  It reflects the common law position, but it is ‑ ‑ ‑

MR WILLIAMS:   In this case, yes, but of course there was not such a termination on such grounds.  What there was was a termination in accordance with the provisions of 4.1(b):

the Company giving you three (3) months’ notice in writing or payment in lieu thereof ‑ ‑ ‑

KIEFEL J:   In a commercial sense though, why would the parties want to restrict themselves in 4.3 to “effected” being limited to an historical fact?

MR WILLIAMS:   Well, there are a number of reasons why that could be the case.  It is not unknown in the commercial world in cases of this nature for a contractual right of termination to be exercised and then for, for some considerable period of time later, the company to go fossicking through years and years’ worth of transactions to try and find some reason to get out of paying the contractual entitlements.

KIEFEL J:   But as has been mentioned, it is in the nature of fraudulent activity that it is often not discovered until later.

MR WILLIAMS:   That is the very point that was addressed in Cavenagh and all of the matters that your Honour is putting to me as policy reasons why one might interpret the clause in another way were all set out and dealt with at some length in paragraphs 27 and following of Cavenagh by Lord Justice Mummery and also by Lord Justice Tomlinson at paragraphs 54 and 55. His Honour Lord Justice Tomlinson at the end of 55 made this point:

When an employer elects to terminate a contract on notice and offers payment in lieu of that notice it elects for a clean break.  It takes the risk that it may subsequently discover matters which would have justified summary termination for breach, just as it takes the risk that the employee might subsequently have died or found a more attractive job elsewhere.  The employers here obtained precisely that for which they had bargained.  There is no basis upon which they either can or in my view should be able to deny to their employee that for which correspondingly he bargained.

What is really going on here is a process of construction which is inconsistent with the principles that this Court referred to recently in the special leave application in the case known as Western Exports v Jireh International.  What has happened here is there is an infringement of the two principles set out there on two bases.  First of all, the Court of Appeal seems to have thought that the contract would have had a better businesslike operation if it was to be interpreted differently but, as this Court said in Jireh:

A court is not justified in disregarding unambiguous language simply because the contract would have a more commercial and businesslike operation if an interpretation different to that dictated by the language were adopted.

The second point, of course, from Jireh is the inappropriateness of an intermediate Court of Appeal fundamentally altering the common law principle that is referred to in both Shepherd v Felt and Textiles and in Sunbird, which his Honour the learned President refers to.  Your Honours, I will deal very quickly with Justice Meagher because I just need to deal with my other point.  Justice Meagher also was influenced by the principle in Shepherd v Felt and Textiles.  One sees that commencing at paragraph 154, application book 151 where his Honour states the principle and refers at the top of application book 152 to the concept that:

To construe it in that way reflects the position as it would be under the common law and accommodates the reality (illustrated by cases such as Shepherd and Concut) that misconduct or fraudulent activity may be discovered subsequently.

The point is that parties are free to contract in any way that they wish.  These particular parties contracted in the way which is reflected in the clause.  Then his Honour at 159 says:

the language used is to be given its ordinary meaning unless there is some contrary indication in the clause or otherwise within the contract.  In face of such a contrary indication, it is permissible to depart from that ordinary meaning to avoid inconsistency.

His Honour refers to a number of cases about common sense, honest businessmen and the like.  His Honour includes the reference to Australian Broadcasting Commission v Australasian Performing Right Association Limited.  That of course reflects traditional principles about, even if the result does not seem to be the one that the parties might have intended, if the words are clear and unambiguous, one applies them; the very point this Court was making in Jireh. 

So just in finality in relation to this point, at the foot of paragraph 160, his Honour Justice Meagher also deals with the justification in law argument so that the proposition that his Honour is contending for is – I am sorry that finds, is once again consistent with and derives from the same type of reasoning as that which the learned President did.

FRENCH CJ:   Now, as to the characterisation of the conduct which is the other point, do you say it is a characterisation which simply was not open, or is there some error of principle informing it?

MR WILLIAMS:   We say that the principle was correctly stated; we accept that.  What happened, there was a misapplication because there was a confusion between the application of the test to an employee and that which might be being considered in the case of a breach of director’s duties case.  What happened is that the proper analysis of whether or not what had occurred was really repugnant to the relationship or really inconsistent with the relationship of trust and confidence got diverted – hijacked in a sense – into an analysis of breaches of director’s duties. 

What we had here was a finding of personal honesty on behalf of the applicant.  We had a finding that to the extent that there was an overpayment for a short time it was as a result of an honest mistake and that meant that when one goes to the passage that the Court of Appeal was particularly concerned with – this is to be found in the judgment of the President at application book 118 - his Honour correctly sets out the test in 83, then makes reference in 84 to Blyth Chemicals and whether the:

conduct was capable of an innocent construction compatible with the relationship ‑ ‑ ‑

FRENCH CJ:   Do you agree with the first sentence in 84, by the way?

MR WILLIAMS:   No.  The main issue was as to whether the conduct was repugnant – the conduct as found was repugnant in the sense that is described in paragraph 83.  So, after reference to Blyth Chemicals and whether the “conduct was capable of an innocent construction compatible with the relationship”, in which case the “motives and intentions” become “all‑important”, his Honour then says:

On the other hand, where the conduct is not capable of an innocent construction, such as an employee taking a secret commission, the Court may be of the view that evidence of the belief of the employee that he saw nothing wrong with this would not be taken as relevant -

But we are not talking about a case anywhere near a secret commission case; we are talking about a case where there was, let us say, a specific

finding of honest mistake in relation to one payment.  In relation to the other matters, the – sorry, I see the light – in relation to the other matters, we have a situation where the employee thought he was using the bonus payments to which he was entitled.  Now, he might have been mistaken about that and maybe it does not reflect well on him, but it is conduct well short of that justifying summary dismissal.  If it please the Court.

FRENCH CJ:   Thank you, Mr Williams.  Mr Jackson, we do not need to hear from you as to characterisation of the conduct.  It is just the first points ‑ ‑ ‑

MR JACKSON:   Your Honour, may I deal with, in this order, two aspects?  One of them is the particular contract question, if I can put it that way, and the other is the approach to be taken to the Shepherd v Felt and Textiles aspect of the matter.  Your Honour, may I just mention something about the Shepherd v Felt and Textiles aspect before I go on to the other aspect? 

What I wanted to mention was just this.  One would think really, looking at our learned friend’s submissions, that this was the first occasion on which the matter had been dealt with by an intermediate appeal court in Australia.  In fact, the decision of the Queensland Full Court, as it was, in Minion v Graystone Pty Ltd [1990] 1 Qd R 157 dealt precisely with the issue, and I will come to that in a moment, and in our favour. The second aspect I wanted to say about that, and again I will develop that, is that the basis upon which Justice Vickery decided in Victoria seems quite opposed to the views expressed by this Court in Concut.

Your Honours, may I come to the particular contract point?  The point is most clearly made, with respect, by Justice Meagher and your Honours will see at page 151 and in the paragraph numbered 152 the arguments advanced by the two parties.  As the first sentence of paragraph 153 suggests, the issue turned on the terms of the employment agreement and your Honours will see those set out at page 83. 

Now, could I take your Honours to page 83 for a moment?  Your Honours will see that clause 4.1(b) provides for payment in lieu of notice on termination.  Your Honours will also see that clause 4.2 in its opening words makes clear that the benefits under clause 4.2 are benefits which are in “addition to” those provided for by 4.1(b).  The opening words of clause 4.3, in our submission, make it very clear that it is speaking of the termination payments, in the plural, which are referred to in clause 4, and they are those referred to in 4.2 and 4.1(b).  That is the point which is made at page 152 in paragraph 155.

Your Honours, the payment under clause 4.1(b) is one which is to be made on termination.  Your Honours will see that referred to at page 152, paragraph 157, and particularly about line 41 to the end of that paragraph.  That fact is the foundation for the three strands of reasoning set out in paragraph 158.  Your Honours will see the first strand at about line 12 on page 153.  The second commences at about line 21 and the third at about line 28. 

Now, your Honours, those considerations lead to the conclusion at page 154 in paragraphs 160 and 161.  Your Honours will see – I shall not read them out, of course, but we would submit that those conclusions, as was said in the opening words of paragraph 162, are ones based on the terms of the agreement and in particular on the construction of clause 4.3.  Your Honours, that, in our submission, was a view perfectly open to the Court of Appeal.  His Honour’s views were agreed in by the other two members of the court and it is one which, in our submission, reflects the better view of the provisions of clause 4.

FRENCH CJ:   His Honour says it does not really matter about whether you agree with what Justice Vickery said in Hodgson, it is just determined by the text.

MR JACKSON:   Yes, your Honour, it is a textually‑based view and as our learned friends have said you look at the text and that is what the court did.  Your Honours, could I come then to the Shepherd v Felt and Textiles argument.  The basic argument appears to be that there is a difference of view between – so far as Australia is concerned – the Court of Appeal in this case and that of Justice Vickery in Hodgson v Amcor and that, accordingly, special leave should be granted.

Your Honours, we would submit that there are three reasons why – I am sorry, your Honours, I should also say the decision of the English Court of Appeal is also put in aid, a decision which one notes does not refer to any Australian cases.  There are three reasons why we would submit that course should not be adopted.  The first is that there is, of course, so far as the question as between the Court of Appeal and Justice Vickery, a difference in the levels in the judicial hierarchy of the two courts.

The second feature, your Honours, is that the Court of Appeal’s decision, as I submitted a few moments ago, in this case does not stand alone.  There is the decision to similar effect of the Queensland Full Court and may I take your Honours to it now.  That is Minion v Graystone Pty Ltd [1990] 1 Qd R 157 which dealt directly with the issue. Could I take your Honours to the judgment of Justice McPherson in that case, with which Chief Justice Macrossan agreed, and go in particular to page 163 at about line 14. His Honour said:

There are really two points involved in this submission.  The first is whether the principle in Shepherd’s case is available specifically in the case of action taken under an express provision of the contract itself; the second is whether it extends to action other than the discharge or termination of the contract.

Now, your Honours, those issues are discussed in a passage which commences immediately after that and it goes through to page 165 and, relevantly, about line 12.  Could I say, your Honours – I will not attempt to go right through it now, but may I refer your Honours to a couple of passages in it.  One is page 163, about line 33 where having referring to Rawson v Hobbs in this Court his Honour said:

The decision is therefore authority for saying that a party may ex post facto invoke a breach of contract to justify his own repudiation even where it arose from an unsuccessful attempt to invoke an express power to terminate or “annul” the contract –

et cetera.  Your Honours, could we refer to page 164, about line 6, a reference to a decision of Justice McGarvie in Victoria –Matthews v Brodie - and the passage goes to about line 11 on that page.  On the same page, the paragraph commencing at the bottom of the page:

These later statements of the principle –

and going through to about line 42, and page 165, commencing at about line 4 and going perhaps 10 lines into that paragraph.  Your Honours, we would say it is hardly a new approach taken by the Court of Appeal but if I could go back to the next point we make about this issue, the decision of Justice Vickery in Hodgson v Amcor appears very significantly based on a passage in the speech of Lord Atkin in Bell v Lever Bros.  Your Honours will see that Justice Vickery’s reasons are to be found in 264 FLR and the relevant passage commences at page 245, paragraph 1600.

Could I just say, your Honours, that the – as I said, the reasoning of Justice Vickery appears very significantly based on Lord Atkin in Bell v Lever Bros but the point I will seek to make is that in Concut v Worrell this Court dealt very fully with those remarks and treated them as not relevant to an issue of this kind. If I could go then to paragraph 1600 and your Honours will see at paragraph 1600 his Honour says:

There are examples where a similar approach has been taken in relation to a termination undertaken pursuant to the express terms of the contract in question.

You will see at paragraph 1601 that his Honour accepted that the Shepherd principle could apply where a termination had taken place pursuant to express terms, as distinct from in consequence of breach. That is supported, your Honour, by the discussion at paragraph 1603 through to 1609. Your Honours, you will see the reference to Minion v Graystone at paragraph 1609.

Then, your Honours, if one goes to paragraph 1610 one sees the paragraph commencing “However”.  The judge set out then, at paragraphs 1611 through to 1617, four considerations which he said made the Shepherd principle not germane. The most relevant of those, your Honours, commences at paragraph 1612 and your Honours will see if one goes through paragraphs 1612 to 1614 that it is based on Lord Atkin’s observations in Bell v Lever Brothers at page 228 of that case.

FRENCH CJ:   When his Honour there is using the term “on one basis” he is not using that in a sense of on one ground, he is really talking about different classes of termination or procedures, perhaps.

MR JACKSON:   I think that is so, your Honour, yes.  Could I just say that the remarks of Lord Atkin put typically in an attractive way do not - his Honour does not seem to have noted that those remarks of Lord Atkin were discussed at some length and, if I may say so, with respect, without apparent enthusiasm for their present relevance in the joint reasons of Chief Justice Gleeson and Justices Gaudron and Gummow in Concut v Worrell 75 ALJR 312. Could I take your Honours to that case and, in particular, to page 315, paragraph [16].

Your Honours will see in paragraph [16] at the right column, (iv), that the issues which arose were the significance of certain remarks of Lord Atkin and those remarks are dealt with at page 318, commencing paragraph [33].  As is apparent from the concluding words of paragraph [33] on page 319 - your Honours, I should say there is a slightly larger quote from Lord Atkin given at the top of 319 in the left column but in the concluding words at letter C in the left column their Honours say:

However, as these remarks show, Lord Atkin was concerned with avoidance of agreements for failure to disclosure past misconduct and the recovery of moneys paid thereunder.

Now, the discussion of that issue goes through to paragraph [38] and your Honours will see at the commencement of paragraph [38] it is said:

The fundamental point is that the present appeal is not concerned with any claim by Concut to avoid Mr Wells’ contract for alleged failure by Mr Wells to disclose alleged misconduct . . . Rather, the

outcome of the case turns upon the breach of an obligation implied by law in the employment contract -

Your Honours, it is clear, with respect, that their Honours treated the observations of Lord Atkin in Bell, which were relied on by Justice Vickery, as dealing with a different topic.  In our submission, so far as one is concerned with Justice Vickery’s remarks, they are, it is submitted, with respect, not something which merits the grant of special leave.

Could I turn to the other observations upon which special leave on this point is sought and those are contained in the decision in Cavenagh v William Evans Ltd in the English Court of Appeal?  Your Honours will see from passages that have been quoted, paragraphs 36, 37, 42 and, I think, 55 of that decision, the case is treated as one turning on election.

Your Honours, a difficulty with applying concepts of that kind to matters of the present kind is that in our law, at least, election turns upon, or turns, relevantly, upon some knowledge of the facts involved in dealing with the election.  Your Honours, our submission is that the case is not one where special leave should be granted.

FRENCH CJ:   Yes, thank you.  Yes, Mr Williams.

MR WILLIAMS:   If your Honours please.  In each of the cases to which my learned friend has taken the Court, when it comes to a statement of what the principle involves, one always finds the use of the word “justification”.  That is the key to the principle.  In this case, the principle is not being used as a justification.  Rather, it is being used as Justice Vickery described it that passage at 1611 and 1612 to convert a termination taken pursuant to a contractual provision which thereby gives rise to contractual obligations into something different. 

That is the point of difference between the principle correctly identified by Justice Vickery and the principle that has been held to apply by the Court of Appeal.  At 1611, his Honour makes reference to the manner of termination and says:

The issue was whether Amcor’s conduct at the time amounted to the giving of the necessary notice of termination to Hodgson.  Having determined that it did –

In other words, that there was termination in accordance with the contractual provisions -

no question arises as to whether there were any additional grounds to justify the contractual termination which were not known or relied upon by Amcor at the time the action was taken.

Similarly, the court at first instance in this case said that is why the submissions about Shepherd v Felt and Textiles missed the point because here we have not a case where justification is in issue, not a case like Concut where the termination on one ground was sought to be justified by the unknown facts that existed. 

That is why, when one looks at Cavenagh, one also sees the word “justification” used whenever the principle is invoked.  That is why when the court in that case looked at the matter it said notwithstanding the fact that this conduct was not known about the party that wished to terminate the contract had a choice.  It went about terminating it in a way that gave rise to contractual rights.  If it goes about terminating in a way that gives rise to contractual rights, i.e., a debt, money due and payable, then that is the consequence of the contract. 

It could have contracted differently, but it did not do so, and that is the point that differentiates the proper statement of the principles which are to be found in Cavenagh and in the Victorian Supreme Court’s decision as opposed to the principles that are now set out in the intermediate Court of Appeal in this State.

Now, when one then looks at the other case to which my learned friend referred, Minion, one finds that yes, it involved a contractual right to take control of and complete works, but it was not a contractual provision that gave rise to a contractual obligation to pay money.  That is the point of difference.  When one reads the passages that my learned friend asked your Honours to have regard to in Minion at 163, line 35, one sees the principle expressed yet again in terms of justification; at 164 at line 43 in terms of justification; and at 165, line 5, in terms of justification.

That is the problem with the Court of Appeal’s approach.  It has taken a common law principle that deals with justification and misapplied it and construed a contract on the basis of that misapplication of the principle.  So whilst there is a textual argument to be had about all of this, it is a textual argument that is very much bound up with the way in which the Court of Appeal dealt with that principle and misapplied it. 

It is a case deserving of special leave because that statement “erroneous extinction” of the principle, or “misapplication” of the principle, or “misstatement” of the principle should not be permitted to stand.  It is a matter of commercial public importance, and there are conflicting decisions of the court on the issue.  May it please the Court.

FRENCH CJ:   Thank you, Mr Williams.

This application for special leave arises out of the dismissal of the applicant from the position of Managing Director and Chief Executive Officer of the respondent and the denial to him of termination benefits on the basis of misconduct discovered after his dismissal. 

On the question of whether the Court of Appeal applied a proper test for the characterisation of his conduct we see no reason to doubt the correctness of their Honours’ approach.  The question of whether the conduct could provide a basis for withholding of termination benefits, notwithstanding that it was not known at the time of his dismissal, depended upon the construction of cl 4.3 of his contract of employment as explained by Meagher JA.  The construction adopted by the Court of Appeal adverse to the applicant is not attended with sufficient doubt to warrant a grant of special leave.  That being so, the argument involving the application of the decision of this Court in Shepherd v Felt and Textiles of Australia Ltd (1931) 45 CLR 359 does not arise. Special leave will be refused with costs.

AT 10.19 AM THE MATTER WAS CONCLUDED