Hine v Macquarie Bank Limited
[2018] VSC 411
•30 July 2018
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
EMPLOYMENT AND INDUSTRIAL LIST
S CI 2017 02922
| CAROLYN HINE | Plaintiff |
| v | |
| MACQUARIE BANK LIMITED | Defendant |
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JUDGE: | Ierodiaconou AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 28 May 2018 |
DATE OF RULING: | 30 July 2018 |
CASE MAY BE CITED AS: | Hine v Macquarie Bank Limited |
MEDIUM NEUTRAL CITATION: | [2018] VSC 411 |
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PRACTICE AND PROCEDURE — Application to summarily dismiss parts of further amended statement of claim —Application to strike out parts of further amended statement of claim —Pleadings embarrassing — Failure to establish sufficient nexus between claims and alleged breaches.
EMPLOYMENT — Whether employer’s policies formed part of employment contract — Romero v Farstad Shipping (Indian Pacific) Pty Ltd (2014) 231 FCR 403 — Repudiatory conduct — Whether individually trivial contractual breaches amount to a substantive breach.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M Bromley | White and Mason Lawyers |
| For the Defendant | Mr J Bourke QC with Ms F Leoncio | K & L Gates |
HER HONOUR:
Ms Hine was employed by Macquarie Bank as a strategic financial planner for approximately 11 years. Ms Hine claims that Macquarie Bank repudiated the employment contract and alleges that, amongst other things, it breached its code of conduct. Macquarie Bank has made an application for parts of Ms Hine’s further amended statement of claim (‘FASOC’) to be summarily dismissed or struck out.[1]
[1]The parts sought to be struck out or summarily dismissed are paragraphs: 9(a), 9(k), 9(m), 9(n), 9(o), 9(r), 13, 18 (to the extent paragraph 18 is relied on in respect of repudiatory conduct), 24–39, 42, 42A, 43, 45–8 and 61, including consequential amendments in relation to the preceding paragraphs to one or more of paragraphs 15, 40, 41 and 50.
Summary of findings
For the reasons that follow, I will disallow Macquarie Bank’s application for summary dismissal of Ms Hine’s FASOC, save for summarily dismissing the parts pertaining to the membership fees term, wrong address claim and computer problems claim (discussed below). I will allow much of Macquarie Bank’s application that parts of the FASOC be struck out on the basis that they are embarrassing. Ms Hine will be given the opportunity to file a second further amended statement of claim in respect of the parts struck out.
Ms Hine pleads that Macquarie Bank engaged in breaches of her employment contract which, either individually or cumulatively, constituted a repudiation of her contract. Many of Ms Hine’s claims concern alleged breaches by Macquarie Bank of its code of conduct (as varied over time). This raises a central issue which should be considered at the outset.
Is the code of conduct incorporated into the contract of employment?
The employment relationship between Ms Hine and Macquarie Bank is subject to two written contracts of employment. The first contract of employment was signed by Ms Hine on 8 April 2005 (‘the 2005 contract’).[2] Ms Hine commenced employment with Macquarie Bank on or about that date. On 31 March 2008, she signed a second employment contract with Macquarie Bank (‘the 2008 contract’).[3] It is now common ground between the parties that the 2008 contract was in effect at the time that Ms Hine’s employment with Macquarie Bank ceased on 1 February 2016.
[2]Exhibit ‘DF-15’ to the affidavit of Dominic James Fleeton, the defendant’s solicitor, sworn on 16 April 2018 (‘the second Fleeton affidavit’).
[3]Exhibit ‘DF-6’ to the affidavit of Dominic James Fleeton, the defendant’s solicitor, sworn on 20 December 2017 (‘the first Fleeton affidavit’).
Both contracts made reference to Macquarie Bank’s code of conduct. The 2005 contract states:
You acknowledge that you must:
…
· comply at all times with the Employer’s Code of Conduct;
…
Under the heading ‘Termination without Notice’ in the 2005 contract, it is stated that employment may be terminated without notice on grounds including ‘serious breach of any of the Employer’s policies, procedures and codes of conduct’.
The acceptance clause in the 2005 contract states:
I hereby acknowledge, and understand and accept the terms of employment as outlined in this Agreement and related documents which have been provided to me.
The 2008 contract does not make express reference to the code of conduct. It does, however, contain a clause regarding Macquarie Bank’s policies. It is as follows:
Macquarie’s Expectations of You
You agree to comply with Macquarie’s policies, the Employee Guide and Macquarie’s Goals and Values (which may be amended and published from time to time and are separate to the terms and conditions of your employment) at all times. Macquarie’s policies are available on its intranet (Macnet) and you agree you will familiarise yourself with these policies at regular times during your employment. The Employee Guide summarises some of the risk management policies applicable to your employment with the Employer. The Appropriate Workplace Behaviour (EEO) policy sets out the Employer’s expectations that you contribute to a workplace which values equal opportunity, promotes freedom from discrimination, harassment and victimisation and does not tolerate inappropriate workplace behaviour.
Macquarie may change, revoke or suspend any of its policies at any time and you must comply with any amended or new policies. A breach of any of these policies may be grounds for disciplinary action which may include the termination of your employment without notice.
(bold added; underline in original)
The 2008 contract contains a ‘termination without notice’ provision stating that employment may be terminated without notice on grounds including ‘serious breach of any Macquarie’s policies’ [sic]. The 2008 contract contains the following clause, which shall be referred to as the ‘entire agreement clause’:
This employment agreement (‘Agreement’) and the letter of offer provided to you set out the terms and conditions applicable to your employment with Macquarie Bank Limited (‘Employer’). They constitute the entire agreement between you and the Employer in relation to their subject matter and supersede any previous written and oral agreements, understandings, commitments and representations between you and the Employer in relation to that subject matter.
By signing this Agreement, you acknowledge and agree that you will comply with the terms and conditions of your employment with the Employer.
The acknowledgement and acceptance clause states:
I understand and hereby acknowledge and accept the terms and conditions of my employment as set out in this Agreement and the letter of offer.
The letter of offer pertaining to the 2008 contract is in evidence.[4]
[4]Exhibit ‘DF-16’ to the second Fleeton affidavit.
During Ms Hine’s employment with Macquarie Bank, there were three different codes of conduct.[5] There is a code of conduct that was implemented in 2005.[6] This was in effect until it was replaced in 2014 by a new code of conduct. The 2014 code of conduct is substantially longer than the 2005 code of conduct.[7] In 2016, the 2014 code of conduct was replaced by the current code of conduct.[8]
[5]First Fleeton affidavit; affidavit of Sheila Bayliss, head of employee relations, sworn 22 May 2018 (‘the Bayliss affidavit’).
[6]Exhibit ‘DF-9’ to the first Fleeton affidavit.
[7]Exhibit ‘DF-8’ to the first Fleeton affidavit.
[8]Exhibit ‘DF-7’ to the first Fleeton affidavit.
Macquarie Bank’s submissions
Macquarie Bank says that to the extent that Ms Hine’s repudiation claim relies on alleged breaches of the code of conduct, there are four reasons to dismiss it.[9]
[9]Defendant’s outline of submissions in support of its amended application for summary judgment/strike-out, 25 May 2018, [35]–[58].
Firstly, Macquarie Bank says there is no contractual foundation for the policies. It says the code of conduct is a policy document and does not form part of the employment contract. Macquarie Bank says the starting point for the analysis is the language of contract. The 2008 contract, as referred to above, contains the relevant terms and conditions. Macquarie relies on the entire agreement clause in that contract. It also relies on the clause above, headed ‘Macquarie’s Expectations of You’, which expressly states that Macquarie Bank’s policies ‘are separate to the terms and conditions of…employment’. It says this exhibits an unambiguous intention that the policies are not to have contractual operation. The policies are dealt with expressly in the contract and cannot be trumped by implied terms.
Macquarie Bank says that the code itself, in its various iterations, does not suggest the parties intended it to form part of the contract of employment. Its provisions specify the conduct required of employees rather than making promises to employees about the behaviour of others. The code of conduct contains aspirational language. It is pleaded as something Ms Hine needs to do, not Macquarie Bank. The obligation runs from Ms Hine to Macquarie Bank, not the other way around.
Secondly, even if the code of conduct is part of the contract, the terms identified in the FASOC are not promissory or contractual in nature, merely aspirational. Macquarie Bank points to the language of ‘you’, the use of the word ‘expectations’ and the 2005 code’s reference to ‘commitments’. There are no statements in the nature of promissory obligations which are capable of giving rise to contractual entitlements.
Macquarie Bank says the code of conduct contains disciplinary procedures and that does not sit comfortably with it being contractual in nature. It is in the nature of a direction. A breach of the policy may result in termination. It just states the common law position. A direction is not a contractual term.
There are no statements in the code of conduct in the nature of promissory obligations capable of giving rise to contractual entitlements.
Thirdly, Macquarie Bank says there is no connection between many of the alleged incidents and the alleged breaches of the code of conduct. For instance, in respect of the alleged breach of the code of conduct by failure to pay Ms Hine’s professional membership fees, Ms Hine has not identified the manner in which it is alleged Macquarie Bank has breached a term of the code of conduct.
Fourthly, Macquarie Bank says there is nothing in the 2008 contract or the code of conduct to support the contention that, had the terms of the code not been incorporated, Ms Hine would not have entered into the contract of employment. The 2014 code of conduct, which contains most of the provisions that are being relied upon, was implemented after both the 2005 and 2008 contracts were signed.
Further, Macquarie Bank says the code of conduct is amenable to variation and therefore it does not contain ‘essential’ promises. Accordingly, it would not be the case that any breach would justify termination.
In conclusion, Macquarie Bank says the code of conduct cannot support the repudiation claim and to the extent the claim relies on breaches of the code of conduct, it ought to be dismissed. Alternatively, paragraphs 9(m) and (n) of the FASOC ought to be struck out as they relate to the code of conduct.
Ms Hine’s submissions
Firstly, Ms Hine says that the statement requiring compliance with policies in the 2008 contract leads to the conclusion that Macquarie’s policies were contractually binding. She says that, ultimately, the question is what a reasonable person in her position would have understood by that reference. It requires consideration of the text and surrounding circumstances. The language of compliance is contractual talk. It is not fanciful to say the 2008 contract incorporates the code.
Secondly, both the 2005 and 2008 contracts provide that a breach of policies may result disciplinary action, including termination without notice for serious breaches. Ms Hine says it would be hypocritical to say that the policies bind her but not Macquarie Bank. That would be a one‑sided bargain.
Thirdly, Ms Hine says that the reference in the 2008 contract to the policies being separate to the terms of employment does not mean they are excluded. It means they are a physically separate document.
Fourthly, Ms Hine refers to the introduction to the current code of conduct, where the chief executive officer states: ‘Your adherence to the Code is not optional.’[10] That points to the code of conduct being contractual in nature.
[10]Exhibit ‘DF-7’ to the first Fleeton affidavit.
Fifthly, Ms Hine says that whether or not there is an implied duty of good faith in the employment contract is an unresolved issue. Given the language used by Macquarie Bank, such a term or similar term may be incorporated. Alternatively, the language used in the code of conduct leads to a conclusion that the duty to act in good faith can be implied into the contract. It submits that these are issues more appropriate for trial than summary judgment.
Sixthly, Ms Hine says that implied terms cannot be excluded unless they are expressly excluded.
Seventh, Ms Hine says that the question is what a reasonable person in her position would have understood by the policies. She would have thought they were contractually binding by the language ‘you agree to comply’. The code of conduct is not simply aspirational because there are disciplinary consequences if it is breached. Further, the CEO provides a statement in support within the code of conduct. The Annual Report also adopts the code of conduct.
Eighth, whilst the 2008 contract does not refer to the code of conduct, it does refer to goals and values.
Ms Hine says that ultimately the identification of the terms and conditions of her contract of employment with Macquarie Bank is a matter for trial.
Applicable Principles
Macquarie Bank brings its application for strike out or summary dismissal of various paragraphs of Ms Hine’s FASOC under r 23.01 or alternatively r 23.02 of the Supreme Court (General Civil Procedure) Rules 2015. They follow.
23.01 Stay or judgment in proceeding
(1) Where a proceeding generally or any claim in a proceeding—
(a) is scandalous, frivolous or vexatious; or
(b) is an abuse of the process of the Court—
the Court may stay the proceeding generally or in relation to any claim or give judgment in the proceeding generally or in relation to any claim.
(2)Where the defence to any claim in a proceeding is scandalous, frivolous or vexatious, the Court may give judgment in the proceeding generally or in relation to any claim.
(3) In this Rule—
(a)a claim in a proceeding includes a claim by counterclaim and a claim by third party notice; and
(b)a defence includes a defence to a counterclaim and a defence to a claim by third party notice.
23.02 Striking out pleading
Where an indorsement of claim on a writ or originating motion or a pleading or any part of an indorsement of claim or pleading—
(a) does not disclose a cause of action or defence;
(b) is scandalous, frivolous or vexatious;
(c) may prejudice, embarrass or delay the fair trial of the proceeding; or
(d) is otherwise an abuse of the process of the Court—
the Court may order that the whole or part of the indorsement or pleading be struck out or amended.
Macquarie Bank also relies on ss 62 and 63 of the Civil Procedure Act 2010 (‘CPA’) in its application for summary dismissal. They follow.
62 Defendant may apply for summary judgment in proceeding
A defendant in a civil proceeding may apply to the court for summary judgment in the proceeding on the ground that a plaintiff's claim or part of that claim has no real prospect of success.
63 Summary judgment if no real prospect of success
(1)Subject to section 64, a court may give summary judgment in any civil proceeding if satisfied that a claim, a defence or a counterclaim or part of the claim, defence or counterclaim, as the case requires, has no real prospect of success.
(2)A court may give summary judgment in any civil proceeding under subsection (1)—
(a) on the application of a plaintiff in a civil proceeding;
(b) on the application of a defendant in a civil proceeding;
(c)on the court's own motion, if satisfied that it is desirable to summarily dispose of the civil proceeding.
The Court of Appeal outlined the following tests for summary judgment in Lysaght Building Solutions Pty Ltd v Blanalko Pty Ltd:[11]
(a)the test for summary judgment under s 63 of the Civil Procedure Act 2010 is whether the respondent to the application for summary judgment has a ‘real’ as opposed to a ‘fanciful’ chance of success;
(b)the test is to be applied by reference to its own language and without paraphrase or comparison with the ‘hopeless’ or ‘bound to fail test’ essayed in General Steel;
(c)it should be understood, however, that the test is to some degree a more liberal test than the ‘hopeless’ or ‘bound to fail’ test essayed in General Steel and, therefore, permits of the possibility that there might be cases, yet to be identified, in which it appears that, although the respondent’s case is not hopeless or bound to fail, it does not have a real prospect of success;
(d)at the same time, it must be borne in mind that the power to terminate proceedings summarily should be exercised with caution and thus should not be exercised unless it is clear that there is no real question to be tried; and that is so regardless of whether the application for summary judgment is made on the basis that the pleadings fail to disclose a reasonable cause of action (and the defect cannot be cured by amendment) or on the basis that the action is frivolous or vexatious or an abuse of process or where the application is supported by evidence.[12]
[11][2013] VSCA 158 (‘Lysaght’).
[12]Lysaght [2013] VSCA 158, [35].
Analysis
For the following reasons, I will strike out the parts of the FASOC referring to the code of conduct. I will not, however, summarily dismiss them.
The terms and conditions of Ms Hine’s employment contract should be ventilated at trial rather than determined summarily. I adopt the oft-stated principles in Toll FGCT Pty Ltd v Alphapharm Pty Ltd (‘Toll’).[13] They are summarised in Romero v Farstad Shipping (Indian Pacific) Pty Ltd[14] (‘Romero’) below.
One point that is clear is that whether or not a policy will be incorporated into a contract of employment will depend upon the parties’ intentions as objectively ascertained…
In approaching the task of ascertaining the parties’ intention, the starting points will be the language of the contract. The language adopted is to be viewed in context, not in abstract isolation. Further, regard must be had to the purpose and object of the transaction.
In Toll (at [40]), the High Court said:
This Court … has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References as to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That normally requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction.[15]
[13](2004) 219 CLR 165, [40]–[41].
[14](2014) 231 FCR 403.
[15]Romero (2014) 231 FCR 403, 413–14 [34]–[36] (citations omitted) quoting Toll (2004) 219 CLR 165, 179 [40] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ).
In Romero,[16] the Court referred to authority citing Codelfa Construction Pty Ltd v State Rail Authority (NSW):[17]
In Codelfa, Mason J (with whose judgment Steven J and Wilson J agreed) referred to authorities which indicated that, even in respect of agreements under seal, it is appropriate to have regard to more than internal linguistic considerations and to use the circumstances with reference to which the words in question were used and, from those circumstances, to discern the object which the parties had in view. In particular, an appreciation of the commercial purpose of the contract: ‘presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating.’ Such statements exemplify the point made by Brennan J in his judgment in Codelfa:
The meaning of a written contract may be illuminated by evidence of facts to which the writing refers, for the symbols of language convey meaning according to the circumstances in which they are used.[18]
[16](2014) 231 FCR 403, 414 [37].
[17](1982) 149 CLR 337 (‘Codelfa’).
[18]Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 240 CLR 45, 52–3 [10] (per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ) citing Codelfa (1982) 149 CLR 337.
Macquarie Bank referred to the principles in Yousif v Commonwealth Bank of Australia.[19] In that case, the Full Court of the Federal Court upheld a trial judge’s decision that a policy was not part of a contract. This was based on the wording of the policy itself which stated that it was not to be incorporated in the employee’s contract of employment. However, those findings were not on the return of a summary dismissal application. Rather, they were after trial. As the Full Court stated, one cannot simply have regard to some circumstances while disregarding others. All relevant circumstances need to be considered:
Ms Yousif also submitted that, as the Manual makes clear that the contract of employment is to prevail (see the inconsistency provision referred to above), there was an inherent inconsistency between the contract and the Manual. The flaw in this argument is that it seeks to determine the objective intention of the parties by reference to some of the relevant circumstances (namely, the employment agreement and the policies) while disregarding others (namely, the Manual). The question of intention is, however, to be determined by reference to all relevant circumstances, subject only to the rules of admissibility of evidence. Once this is done, there is no inconsistency.[20]
[19](2010) 193 IR 212 (Kenny, Tracey and Jagot JJ).
[20]Ibid 236–7.
Turning now to whether parts of Ms Hine’s FASOC should be struck out insofar as they relate to the code of conduct.
I will strike out paragraphs 9(m) and (n) of the FASOC. Firstly, as discussed above, there are three codes of conduct which have been in force at different times. It is unclear throughout the FASOC, which version of the code is being relied upon. If it is either the 2014 or 2016 codes then they post-date both the employment contracts.
The issue is further confused because paragraph 9(n) alleges that the code contained terms which formed part of the Employment Agreement. The FASOC defines ‘Employment Agreement’ as the 2005 contract at one point and the 2008 contract at another.[21] This makes the pleading embarrassing. Ms Hine must identify which code of conduct she relies upon and how she says this forms part of her contract of employment in force at the relevant time.
[21]FASOC [6], [8].
Paragraph 43 of the FASOC pleads a course of cumulative conduct constituting serious breach of the terms of the employment agreement set out in paragraph 9. It says such conduct was a repudiation of the employment agreement. This paragraph must also be struck out and re‑plead. It is unclear as to which employment agreement is being relied upon. Further, the particulars for the claims pleaded as conduct in paragraphs 13, 15, 18, 24, 25–33, 37 and 39 (referred to in paragraph 43), rely on paragraph 9(n). They too must therefore be struck out, however there will be an opportunity to re‑plead those paragraphs. The nexus between the allegations and the relevant breaches must be clearly pleaded. This is not the case and the pleadings are currently embarrassing as a consequence. The cause of action must be clearly pleaded. Particulars are not intended to fill gaps in a deficient pleading as Dixon J stated in Wheelahan v City of Casey (No 12).[22]
[22][2013] VSC 316 (20 June 2013), [25].
I will now address some of the specific claims that have been pleaded.
Whistleblower Policy
Ms Hine alleges that she reported an issue pursuant to Macquarie Bank’s whistleblower policy and, in breach of it, was not offered support or counselling.[23] She refers to the whistleblower policy that says: ‘We will discuss with you…the general investigation we propose to undertake.’ Ms Hine says she was not told of what would happen after she made the report, nor what the general investigation would be. This is not pleaded.
[23]FASOC [9(r)], [34]–[37A], [40].
Ms Hine concedes that this part of her claim needs to be re-pleaded. Her solicitors requested a copy of the relevant policy but Macquarie Bank refused to provide it.[24] However, it appears (a version of) the whistleblower policy sought by Ms Hine has been exhibited to the Bayliss affidavit.[25] That policy is titled Whistleblower Policy – Australia as updated in July 2013.[26] Further, a Global Whistleblower Policy has also been exhibited.[27] According to the Bayliss affidavit, the latter document replaced all earlier policies and procedures dealing with whistleblowing at Macquarie Bank and was in effect from May 2015 to September 2016.[28] Notably, the whistleblower claim arises from 2014 incidents.[29]
[24]Exhibit ‘GG-2’ to the affidavit of Gessica Giordano, plaintiff’s solicitor, sworn on 25 May 2018 (‘the second Giordano affidavit').
[25]Exhibit ‘SB-1’.
[26]Bayliss affidavit [9].
[27]Exhibit ‘SB-2’ to the Bayliss affidavit [10].
[28]Bayliss affidavit [10].
[29]FASOC [34]–[35].
Ms Hine also concedes that on its own, the asserted breach is not enough to justify repudiation. However, she says the breach by Macquarie Bank of its whistleblower policy is one of a number of breaches by Macquarie Bank that cumulatively constitute conduct amounting to repudiation of the employment contract. Given the code of conduct’s emphasis on the reporting of certain conduct and the apparent failure of Macquarie Bank to follow up on the issue reported by Ms Hine, it is a relevant matter and fact to be pleaded.
Macquarie Bank says that the whistleblower policy did not form part of the employment contract and refers to its submission concerning the code of conduct. It says this is an aspirational policy and there is no foundation for a contractual claim. Nor does the policy contain any obligation to offer support or counselling. It says there is no cause of action and that Ms Hine’s claim, insofar as it relies on the whistleblower policy having contractual force, is therefore frivolous and vexatious.
Analysis
The claim as it relates to the whistleblower policy must be struck out.[30] However, I will not summarily dismiss it because whether the whistleblower policy forms part of the contract of employment is an issue to be ventilated at trial.
[30]FASOC [9(r)], [34]–[37], [37A], and corresponding part of [40], [41].
The whistleblower claim must be struck out because, even assuming that the whistleblower policy can support a contractual claim, there is no nexus with the alleged breach. That is, it does not offer counselling or support.
If Ms Hine were to amend the FASOC to plead the whistleblower policy was breached because Macquarie Bank did not discuss with her the general investigation process it proposed to undertake, this could possibly support her contractual claim.
Ms Hine concedes that the breach itself cannot support the repudiation claim. However, I accept her submission that a cumulative course of conduct may support a repudiation claim.[31] It is possible that a substantial breach may arise from ‘individually trivial’ breaches. This issue was considered in Romero.
If the Policy is contractual and it is breached, [the employer] argues, it would be an absurd result that every time an employee, or for that matter the employer, commits a minor breach, a cause of action in contract would accrue. That argument is without substance. Whatever the terms of a contract, each party is liable to the other if the former acts in breach of one of those terms. The legal remedy for breaches of contract that are trivial is nominal damages. No doubt a court that was called on to decide a claim for a single, trivial and inconsequential breach of contract would now approach the management of the proceedings and the award of costs with the provisions of Pt VB of the Federal Court of Australia Act and its analogues in mind. In a practical sense, parties in an ordinarily harmonious employment relationship will accept a measure of sensible give and take in their day-to-day dealings without resorting to asserting contractual exactitude from the other. That is not to say persistent and unaccepted, but individually trivial, departures from contractual promises could not be considered to be a substantive breach…[32]
[31]Crowe Horwath (Aust) Pty Ltd v Loone [2017] VSC 163 [103]–[105] affirmed on appeal in Crowe Horwath (Aust) Pty Ltd v Loone [2017] VSCA 181.
[32]Romero (2014) 231 FCR 403, 419.
Breach, Incident and Escalation Policy
Both parties make similar submissions in respect of the breach, incident and escalation policy[33] (‘the escalation policy’) as for the whistleblower policy. The policy tendered into evidence was last updated on 1 August 2015, some months before Ms Hine alleges she made a report under the policy.[34]
[33]Exhibit ‘GG-2’ to the first Giordano affidavit.
[34]FASOC [39(i)].
The escalation claim must be struck out and may be re-plead.[35] I consider that whether or not the escalation policy forms part of the contract of employment would be an issue to be ventilated at trial. It is pleaded that Ms Hine was required to report certain incidents and did so, and that the policy was breached by the person to whom she made the report.[36] Ms Hine pleads that this and other breaches caused her to become ill.[37] Ms Hine says that the breach of the escalation policy was part of the cumulative conduct by Macquarie Bank that constituted repudiation of her contract.[38] She says the breach amounted to a breach of the terms of her employment contract pleaded in paragraph 9 (d), (e), (n) and (o). As discussed above, the parts of the claim relying on the code of conduct, including the escalation claim, will be struck out and Ms Hine will be given an opportunity to re-plead them in a manner that clarifies the nexus between the incident and alleged breach of the employment contract. Paragraph 9(o) will be struck out with an opportunity to re-plead the terms of the escalation policy that Ms Hine relies upon.
[35]Ibid [9(o)], [34]–[36], [37A], and corresponding part of [40].
[36]Ibid [9(o)], [39(i)].
[37]Ibid [41].
[38]Ibid [43].
Incentive Payment
Ms Hine’s Submissions
Ms Hine pleads that it was a term of her contract of employment that Macquarie Bank would pay commission to her under an incentive scheme based in part on the gross revenue generated by her (‘the incentive payment term’).[39] She says that in breach of that term and the implied terms of the contract to cooperate and act in good faith,[40] from November 2015 Macquarie Bank reduced commissions payable to and generated by her.[41] Further, in an anticipatory breach of the incentive payment term, she was informed by Macquarie Bank that effective from 1 February 2016 ‘those clients to whom [she] normally provides services have been temporarily allocated to other advisers in [her] absence’ and that from that date ‘any revenue that is received from these clients will be attributed 50% to [her] and 50% to the relevant adviser who is now providing services to the clients’ and that Macquarie Bank ‘reserves the right to change these arrangements in the future and will provide you with notice of any such changes at the time’.[42] Ms Hine pleads that her loss and damage in respect of this term being breached is $33,646.40 for the period between November 2015 and 28 February 2016.[43]
[39]Ibid [9(l)].
[40]Ibid [9(d),(e)], [43].
[41]Ibid [42].
[42]Ibid [42A].
[43]Ibid [61(a)].
Ms Hine pleads that the 2008 contract provides that she be paid under an incentive based structure. Appendix A sets out the base commission definitions. Macquarie Bank’s breach of the incentive payment term was a serious breach and amounted to a repudiation of her contract. She refers to Macquarie Bank’s submission that in reducing her commissions it did not breach the incentive term because she was unable to generate income. Ms Hine says she had existing clients who had assets under management that generated income. In any event, whether or not she generated income is a factual matter to be ventilated at trial. Further, the meaning of ‘generate’ will need to decided. Ms Hine has a real, as opposed to a fanciful chance, that Macquarie Bank breached her contract by reducing her commission. The reduction occurred while she was on sick leave. Even Macquarie Bank recognised she was entitled to some incentive payments as she was still given 50% rather than zero.
Macquarie Bank’s Submissions
Macquarie Bank says that the incentive term pleaded is consistent with the 2008 contract. Ms Hine took sick leave from 16 November 2015 and there is no plea that she returned before tendering her resignation on 1 February 2016. Her claim relates to that period. Ms Hine was not writing or generating income in that period and so did not fall within the formula for paying commission. There is accordingly no contractual entitlement to commission.
Analysis
I accept Ms Hine’s submission that she has a real, as opposed to a fanciful chance, in respect of the incentive payment claim. The question of whether she generated income while she was on sick leave is both a factual and legal question for trial. This will firstly involve consideration of how ‘generate’ is interpreted in the context of the 2008 contract. Secondly, there will need to be a finding as to whether or not Ms Hine did generate income during the period she was on sick leave. Thirdly, the trial judge will need to consider whether Macquarie Bank’s conduct in paying 50% of the commissions in that period is relevant.
I disallow the application to summarily strike out or summarily dismiss paragraphs 42 and 42A of the FASOC in respect of the incentive payment claim. However, the effect of other findings in this ruling is that these paragraphs will be struck out on other grounds and Ms Hine will be given an opportunity to re-plead.
Membership Fees
Ms Hine pleads that as a certified financial planner (‘CFP’) she had ongoing educational requirements and needed to pay an annual fee as a general member of the Financial Planning Association (‘FPA’).[44] She says that during the interview process in March 2005, she was told by a representative of Macquarie Bank that it would pay her annual fees to the FPA for her membership and CFP registration (‘the initial representation’).[45] Ms Hine pleads that it was a term of her contract of employment that Macquarie Bank had ‘an ongoing obligation to arrange, maintain and pay for any fees required for Ms Hine’s FPA membership and CFP certification and take all reasonable steps necessary to keep those financial memberships valid and up to date’ (‘the membership fees term’).[46] She says that unknown to her, and in breach of that term, Macquarie Bank did not pay the annual CFP membership at any time after 26 June 2008, and as a result her CFP membership lapsed around 20 April 2010.[47] Ms Hine says that in breach of the membership fees term, Macquarie Bank did not take all reasonable and necessary steps to reinstate her CFP membership.[48]
[44]Ibid [4].
[45]Ibid [7].
[46]Ibid [9(a)].
[47]Ibid [13], [14].
[48]Ibid [24].
Ms Hine says that her claim that the membership fees term was incorporated into her employment contract is not fanciful. Macquarie Bank paid Ms Hine’s membership fees for three years and held her out as a financial planner. It is not fanciful to suggest that it would continue to do so. The express terms of the 2008 contract are not inconsistent with this as they discuss minimum training, certification and education.
Ms Bayliss of Macquarie Bank gives evidence that Ms Hine ‘did not need to be a member of the [FPA], or be certified as a [CFP], in order for her to lawfully perform her duties for Macquarie.’[49]
[49]Bayliss affidavit [7].
Macquarie Bank says that the 2008 contract is inconsistent with the implication of the membership fees term into Ms Hine’s employment contract. It refers to the express term on ‘training compliance’. It says that Ms Hine now concedes that the certification and membership provided for under the membership fees term, were not required for her to lawfully perform her role at Macquarie. If the term is not necessary to imply for business efficacy, then how can it be implied?
Macquarie Bank also says that Ms Hine’s claim concerning the initial representation (referred to above) cannot found a claim in contract. Nor is there an assertion it did so. It says paragraphs 9(a), 13,and 24 of the FASOC should be struck out.
Analysis
There is no basis for implying the membership fees term into the contract. I accept Ms Bayliss’ evidence, which is conceded by Ms Hine, that FPA membership and CFP certification were unnecessary for Ms Hine to lawfully perform her duties with Macquarie Bank.
Given that finding, the membership fees term should be summarily dismissed.[50] For completeness, I observe that Ms Hine’s plea concerning the initial representation and the allegation of misleading or deceptive conduct in respect of the alleged breach of it, remains in the FASOC and will be an issue ventilated at trial.[51]
[50]FASOC [9(a)], [13], [24], [38], [50]. Consequential amendments to FASOC [15(c)], [40], [41], [43].
[51]Ibid [18] is also allowed to remain on that basis.
ASIC
Ms Hine pleads that she was an authorised representative of Macquarie Equities Limited (‘MEL’), a financial services business operated by Macquarie Bank under the name ‘Macquarie Private Wealth’.[52] Ms Hine says that MEL entered into an enforceable undertaking with the Australian Securities and Investment Commission (‘ASIC’) on 29 January 2013, and that undertaking placed various requirements on MEL.[53] She says that after an initial two year period there was a further 12 month review period. ASIC announced on or about 5 May 2016 that the further 12 month review had been finalised.[54]
[52]Ibid [25]–[27].
[53]Ibid [28]–[31].
[54]Ibid [32], [33].
Ms Hine says this pleading relates to the duty to act in good faith. She says this term is breached by the ASIC claim (outlined above). Ms Hine also says that it is relevant that the enforceable undertaking was in place at time she made a complaint under the whistleblower policy.
Macquarie Bank says that, putting to one side the question of the implied duty of good faith, Ms Hine has failed to identify how these parts of the claim could be regarded as a breach of any implied duty of good faith. She has not pleaded the material facts establishing a connection between the ASIC claim and her employment. The pleading is embarrassing because it concerns extraneous matters which obfuscate the real issues in dispute.
Analysis
The nexus between the ASIC claim and Ms Hine’s employment has not been pleaded. It is embarrassing. The fact that MEL entered into an enforceable undertaking or that the review period was extended cannot itself support the claim there is a breach of the duty of good faith. They are outcomes. There is no particular conduct identified. If there is particular conduct that Ms Hine relies upon it needs to be pleaded. I accept that there may be a factual nexus between the ASIC claim and other parts of Ms Hine’s claim. That is, that there may be material facts that she wishes to rely upon. However, as it stands, the pleading is embarrassing. The ASIC claim[55] will be struck out and Ms Hine will be given an opportunity to re-plead it.
[55]Ibid [25]–[33].
Insurance
Ms Hine pleads that it was a term of her contract of employment that Macquarie Bank would maintain salary continuance, death and total and permanent disability insurance through the payment of salary continuance premiums and superannuation contributions (‘the insurance term’).[56] She says that in breach of this term, Macquarie Bank failed to make timely payments to her superannuation fund resulting in the lapsing of her insurance coverage.[57] Alternatively, by reason of the employment relationship, Macquarie Bank was under a duty to take reasonable care to ensure its actions did not result in the lapsing of Ms Hine’s insurance coverage.[58] By failing to make timely payments to her superannuation fund and failing to notify it that she had ceased employment, Macquarie Bank breached that duty, and consequently Ms Hine suffered loss and damage.[59]
[56]Ibid [9(k)].
[57]Ibid [45].
[58]Ibid [46].
[59]Ibid [47], [48].
Ms Hine says that the 2008 employment contract contains terms on death and total and permanent disability insurance. Further, that a feature of the default superannuation plan is that it includes that type of insurance.
Macquarie Bank says that the insurance term is inconsistent with the 2008 contract because it provides that Ms Hine must pay for salary continuance insurance. However, if Ms Hine wishes to rely on the contract, then it should be pleaded.
Analysis
Superannuation
The 2008 employment contract states:
The Employer will make contributions for you into a complying superannuation fund which equal the minimum level of superannuation contributions which the Employer must make for you for the purposes of the Superannuation Guarantee (Administration) Act 1992 and the Superannuation Guarantee Charge Act 1992 as amended from time to time.
On commencement of employment, you will have access to a Choice Election Form (CEF) which gives you the opportunity to choose your own complying superannuation fund or retirement savings account.
If you do not make a choice, the Employer’s contributions will be paid into the default fund which the Employer has chosen (which will be set out in the CEF). Please note that the Employer is not obliged to accept more than one request from you to change superannuation funds within any 12 month period.
The minimum superannuation contributions for part of your BCR.
A feature of the Employer’s default superannuation plan is Death and Total and Permanent Disability cover, with the annual premium being funded from your superannuation account. Please note that cover ceases under the Employer’s plan for employees once they reach their 65th birthday.
Please also be aware that Death and Total and Permanent Disability cover is not a feature of all superannuation plans.
The clause itself does not contain an obligation on Macquarie Bank to pay or maintain death and total or permanent disability insurance. The clause notes that such insurance is a feature of the default superannuation plan (but not all superannuation plans), and is funded from the superannuation account. However, the clause provides an obligation for Macquarie Bank to make superannuation contributions for the purposes of the Superannuation Guarantee (Administration) Act 1992. There is an allegation that these superannuation contributions were not made in a timely manner. Whether that is an obligation arising from the superannuation clause, and whether it had the consequence that the insurance was not maintained, may be an issue for trial. However, that is not what Ms Hine has pleaded. Ms Hine has not identified the basis of the alleged contractual term. Nor is there the nexus between the alleged duty to take reasonable care and the alleged contractual term identified. The pleading will be struck out. Ms Hine will be given an opportunity to re-plead the term if she wishes to adopt her submissions made at hearing and rely upon the 2008 contract clause or otherwise identify the nexus between the alleged duty to take reasonable care and the contractual term.
Salary Continuance Insurance
The 2008 employment contract provides:
If you work 15 or more hours per week and are under the age of 65, you must be covered by Salary Continuance Insurance (SCI) for temporary disability.
Unless you choose to arrange your own cover, you will participate in the Employer’s SCI scheme and the premium is charged to your BCR and/or net commission earnings.
If you choose to arrange your own cover, you must provide a copy of that insurance policy to the Employer. Any privately arranged policy must at least be comparable in terms and conditions to the Employer’s scheme.
If you work less than 15 hours per week or are 65 or more years of age, you should consider arranging this insurance privately.
It is important to note that insurance benefits under the Employer’s scheme may be varied or applied in accordance with the terms of the applicable policy in force from time to time and are contingent upon the Employer continuing to be able to obtain cover at reasonable commercial rates.
You should also note that cover ceases under the Employer’s scheme for employees once they reach their 65th birthday.
This clause required Ms Hine to be covered by salary continuance insurance for temporary disability and provided that she would participate in Macquarie Bank’s insurance scheme unless she arranged her own cover. If Ms Hine wishes to rely on the 2008 contract clauses above, then they must be pleaded.
The insurance terms in the FASOC[60] will be struck out and Ms Hine will be given an opportunity to re-plead.
[60]Ibid [9(k)], [45]–[48].
Alleged incidents between July 2014 and November 2015
Ms Hine alleges that there were a number of incidents which occurred at work during the period July 2014 to November 2015, including:
(a) failure to fix systemic problems with computer systems which meant records were lost and things were unable to be recorded (‘computer problem claim’);
(b) being subject to an audit which resulted in a warning and reduction of remuneration even though she allegedly explained it was caused by lack of support and a lack and loss of documentation (‘the audit claim’ together with the paragraph below);
(c) being told to take responsibility for the audit or she could lose her job (‘the audit claim’ together with the paragraph above);
(d) receiving a first and final warning because she had ‘failed’ her audit and the subsequent withholding of her bonus (‘the reduced bonus claim’); and
(e) discovering that Macquarie Bank had incorrectly recorded her address on its learning and development database and had an incorrect telephone number for her (‘wrong address claim’).[61]
[61]Ibid [39(c)-(g)]. Note [39(i)], which is pleaded as conduct within this period, is dealt with in a preceding part of this ruling.
Ms Hine pleads that these incidents are part of the cumulative conduct of Macquarie Bank that constituted a serious breach of the terms of her contract of employment and a repudiation of the contract.[62] She says the terms breached include the duty of good faith, and in some instances the duty of co-operation.[63] Ms Hine also relies on the code of conduct as an implied term of the contract. In respect of the reduced bonus, she concedes this is not properly pleaded as it should be linked to the contractual terms she is relying upon in paragraph 9 of the FASOC, which include the 2008 contract.[64]
[62]Ibid [43].
[63]Ibid.
[64]Ms Hine quantifies the loss and damages allegedly suffered by the reduced bonus in FASOC [61(b)].
Macquarie Bank says that Ms Hine has not sufficiently identified the manner in which its conduct is said to have breached the implied duty to co-operate and act in good faith (if one accepts such duties are owed). It says the pleading concerning the computer systems is vague and lacks meaning.
Macquarie Bank relies on the 2008 contract terms which deal with bonuses.[65]
[65]2008 employment contract, 71.
Macquarie Bank says that the matters pleaded, either individually or cumulatively, could not evince an intention not to be bound by the whole of the 2008 contract or the fundamental obligations under it. It says the paragraphs should be struck out as they do not disclose a cause of action.
Analysis
I have already ruled above in respect of the code of conduct as an implied term and that need not be reiterated here.
The computer problem claim is both vague and fanciful. It should be summarily dismissed.[66] So should the wrong address claim.[67] Both these claims fail to establish a nexus with any alleged breach of contract.
[66]FASOC [39(c)].
[67]Ibid [39(g)].
As to the reduced bonus claim, it will be struck out. Ms Hine has conceded it is not properly drafted, and she will be given an opportunity to re-plead it.[68] It will not however be summarily dismissed, as I cannot find the underlying claim has no real prospect of success.
[68]Ibid [42], [42A], [61].
As to the audit claim, it is necessary for Ms Hine to plead how she says the alleged contractual terms were breached. The audit claim will be struck out and Ms Hine will be given the opportunity to re-plead.[69]
[69]Ibid [39(d),(e)].
Conclusion
I will hear the parties on the appropriate form of orders consequential to this ruling.
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