Kavanagh v State of Tasmania
[2000] TASSC 45
•17 May 2000
[2000] TASSC 45
CITATION: Kavanagh v State of Tasmania [2000] TASSC 45
PARTIES: KAVANAGH, William Dudley
v
STATE OF TASMANIA
TITLE OF COURT: SUPREME COURT OF TASMANIA (FULL COURT)
JURISDICTION: APPELLATE
FILE NO/S: FCA 72/1999
DELIVERED ON: 17 May 2000
DELIVERED AT: Hobart
HEARING DATE: 16 March 2000
JUDGMENT OF: Cox CJ, Underwood J, Evans J
CATCHWORDS:
Contract - General contractual principles - Construction and interpretation of contracts - Other matters - Conditions precedent generally - Clause in deed of release not a condition precedent.
Aust Dig Contract [120]
Contract - Discharge, breach and defences to action for breach - Repudiation - What amounts to repudiation - Magnitude of breach and importance of term breached.
Laurinda Pty Ltd v Capalaba Shopping Centre Pty Ltd (1989) 166 CLR 623; Shevill v Builders Licensing Board (1982) 149 CLR 620, applied.
Aust Dig Contracts [130]
REPRESENTATION:
Counsel:
Appellant: In person
Respondent: T J Ellis
Solicitors:
Appellant: In person
Respondent: Director of Public Prosecutions
Judgment Number: [2000] TASSC 45
Number of paragraphs: 44
Serial No 45/2000
File No FCA 72/1999
WILLIAM DUDLEY KAVANAGH v STATE OF TASMANIA
REASONS FOR JUDGMENT FULL COURT
COX CJ
UNDERWOOD J
EVANS J
17 May 2000
Orders of the Court:
Appeal dismissed.
Serial No 45/2000
File No FCA 72/1999
WILLIAM DUDLEY KAVANAGH v STATE OF TASMANIA
REASONS FOR JUDGMENT FULL COURT
COX CJ
17 May 2000
I agree that this appeal should be dismissed for the reasons prepared by Underwood J which I have had the advantage of perusing.
File No FCA 72/1999
WILLIAM DUDLEY KAVANAGH v STATE OF TASMANIA
REASONS FOR JUDGMENT FULL COURT
UNDERWOOD J
17 May 2000
The appellant brought an action against the Attorney-General for the State of Tasmania for damages for breach of contract. It was dismissed and judgment was entered for the respondent. The appellant has appealed against that judgment alleging errors of fact and law by the learned trial judge. The appellant is both a legal practitioner and an architect but has never practised as a lawyer. He conducted his own case at first instance and on appeal.
The relevant facts
For many years prior to 1988 the appellant was employed as an architect in the Housing Department. On 3 February 1988, pursuant to the provisions of the Tasmanian State Service Act 1984, s38 ("the Act"), the appellant entered into an employment contract with the relevant Minister. The contract, which was expressed to expire on 14 February 1993, provided that the appellant be employed as General Manager, Development, Department of Housing. The contract specified the appellant's duties and made provision for salary, leave entitlements, retirement benefits and the like. It also provided that:
· "7 The Crown may terminate this agreement at any time and in that event the contract employee shall be entitled to be appointed to a position as a permanent employee in the State Service, not lower in classification and salary than that which he held immediately before he became a contract employee.
· 8 The contract employee shall provide three months notice in writing of his intention to terminate this agreement prior to the termination date and such notice shall be binding on both parties unless both parties shall agree otherwise.
· 9 Six months prior to the termination date of this agreement, notice in writing shall be given by the Crown of its intention to renew or not renew this agreement for a further term, and the contract employee shall confirm in writing his intention to accept or not accept the renewal of this agreement for a further term."
The learned trial judge said with respect to cl 7:
"Clause 7 appears to have been formulated on the assumption that the contract of service which, on its face, purports to be a "standard agreement for internal appointees", will apply only in the case of an existing permanent member of the State public service whose status is to be varied temporarily to that of a contract employee, with the expected consequence that, upon termination of the contractual period, such employee may well seek to resume with the public service without loss of seniority or diminution of salary or entitlements which continued service as a public servant would have entitled him to if he had not been placed on contract."
In the event of the appellant's contract being terminated, the Act, s47 provided that the appellant might, in the circumstances therein prescribed, become "surplus to the requirements of the Agency". The Act further provided that unless an employee who is surplus to requirements is re-deployed with his or her consent to another agency, he or she may then be placed on the unattached list for up to 12 months. Finally, the Act provided that if such an employee is not redeployed within the State Service, within the 12 month period, he or she may be called upon to resign and if he or she refuses to do so, may be dismissed.
In 1990, the Housing Department underwent a period of substantial restructuring. On more than one occasion during the course of the re-organisation, the appellant was asked to assume different duties. The appellant undertook those duties and was promised increased remuneration, but this did not come to pass.
In about July 1990, the appellant was advised that his duties would be that of General Manager (Asset Management), Department of Construction. These duties were quite different from those prescribed in the 1988 contract and involved increased responsibility. The appellant asked for a new contract and payment of salary equivalent to that paid to members of the Senior Executive Service (SES), Level 3. The Crown refused to enter into a new contract with the appellant and claimed that the employment relationship persisted by virtue of the 1988 contract. It was the Crown's claim that by carrying out his new duties, the appellant had accepted a variation of the 1988 contract. In reply, the appellant claimed that he had no choice but to continue working, for had he stopped, he would not have been paid anything. The Crown also refused the appellant's request that he be paid salary at the rate of that paid to members of the SES, Level 3, on the basis that it was too great a jump from the salary payable by virtue of the 1988 contract.
The dispute dragged on through the latter half of 1990. In December that year, the appellant and the Secretary of the Department of Construction reached an agreement with respect to the appellant's new duties and the payment of a salary equivalent to a member of the SES, Level 4. However, the learned trial judge held that this agreement was not binding on the Crown because the appellant and the Secretary were well aware that their agreement had no effect until it was ratified by the Premier, or the Secretary of the Department of Premier and Cabinet. There is no appeal against this finding. The requisite ratification was not given.
In April 1991, the Secretary of the Department of Construction advised the appellant that his salary would be the equivalent of that paid to members of the SES, Level 3. The appellant was not content with this and there were further negotiations with respect to the appellant's conditions of employment. In result, the appellant and the Secretary of the Department of Construction settled the terms of the appellant's employment with the salary to be classified at SES, Level 3. This agreement also needed the ratification of the Premier or the Secretary of the Department of Premier and Cabinet. Such ratification was not forthcoming. The Secretary expressed the view that it was not possible to increase the appellant's salary to SES, Level 3 immediately.
On 8 July 1991, the appellant wrote the following memorandum to the Secretary, Department of Construction, accepting what he claimed was the revocation of the 1988 contract of employment:
"Following the meeting between my solicitor and the Solicitor-General of Friday, 5th July, I have now been given a briefing on the nature of the discussions. From my perspective the discussions did not advance the situation in any constructive sense. For this reason the memo of 12 June 1991 from the Secretary, DPAC, is welcome in that it has finally clarified the position. The memo makes clear that the Crown does not intend that my original S 38 contract, howsoever varied or agreed, is to continue. The statement that I am not eligible to translate into the Senior Executive Service at Level 3 taken together with the requirement that the position be advertised are both open to no other interpretation. On that basis I have no alternative but to elect to treat that memo as notice of revocation of the S 38 contract by the Principal and that I have, in consequence, now been returned to the State Service Establishment. I reserve my position accordingly.
I would be grateful for early discussions to resolve my future position within the Department."
The appellant took some leave. Whilst on leave, he was relieved of all existing duties and advised that the position of General Manager (Building, Construction and Maintenance) would be advertised and he could apply for it should he wish to do so.
In response, the appellant expressed an interest in taking a redundancy payment in accordance with a redundancy program that was put in place for the purposes of the restructuring process of the Housing Department. He was told that a payment in accordance with that program was no longer available. The appellant thereupon formulated and submitted a claim for damages for breach of the 1988 contract of employment.
The appellant discussed his claim with the Secretary of the Department of Construction. On 16 October 1991, the latter, having received legal advice, advised the appellant that the claim would be met, subject to checking the calculations. That day, the appellant and the Secretary agreed that pending final settlement, the appellant would take leave. As the appellant had calculated his claim by reference to 14 October 1991, he and the Secretary agreed that although the appellant had been at work on 15 and 16 October 1991, those two days should be treated as if he had taken leave. Thus, the need to completely recalculate his claim would be avoided. The appellant believed that the dispute had been settled. He cleared out his office, returned his car, handed in his mobile telephone and gave up his office keys.
However, on 30 October 1991, the appellant was recalled from leave and told by the Secretary of the Department of Construction that he had received revised legal advice and the appellant's claim based upon a breach of the 1988 contract of employment would not be met. The position of the Crown was that there had been no revocation of the 1988 contract and that it was still in force. The appellant was told that in lieu, he could accept a redundancy package, but if he failed to do this, his contract would be terminated in accordance with cl 7. He was also told that as there was no currently available position for him in the State Service, he would be placed on the unattached list and if still there after 12 months, would be asked to resign. By letter dated 1 November 1991, the Secretary asked the appellant to make a decision with respect to the offer of a redundancy package within the ensuing seven days.
On 4 November 1991, the appellant returned to work. However, two days later, 6 November 1991, he gave the Secretary of the Department of Construction written notice of his acceptance of a redundancy package and termination of his employment, effective from 8 November 1991. On 11 November 1991, the appellant signed a deed of release to which I shall refer shortly and therein acknowledged receipt of $55,208.30 redundancy payment.
The legal proceedings
By a writ issued against the Attorney-General for the State of Tasmania on 2 November 1994, the appellant claimed damages for breach of contract. The statement of claim alleged:
· breach of the 1988 contract of employment; and/or
· breach of an agreement made on 16 October 1991 between the appellant and the Secretary settling the claim for damages for breach of the 1988 contract.
By the defence, the Attorney-General for the State of Tasmania put in issue the majority of the appellant's allegations and pleaded the deed of release.
In his reply, the appellant (inter alia) contended:
· in effect, that the release only released the respondent from liability for any claims arising out of the appellant's employment between 4 November 1991 and 8 November 1991; and
· in effect, that the deed of release was not enforceable by reason of false, negligent and deceitful representations made by the Crown that the 1988 contract of employment had not been repudiated and was in full force and effect.
The deed of release
The deed of release executed by the appellant contained the following material terms:
"whereas the Releasor -
A Is currently employed by the Crown
B Has agreed to the termination of his/her employment in return for the Redundancy payment as detailed in this Deed
now this deed witnesseth
1 The Crown undertakes -
(a)to make a redundancy payment of $55,208.30 ('the redundancy payment') within 28 days of the date of cessation to the Releasor in respect of the cessation of employment from close of business 8 November 1991 …
(b)… (not relevant)
2 The Releasor -
(a)acknowledges that his/her employment with the Crown has been terminated with effect from close of business on 8 November 1991.
(b)subject to sub-clauses 1(b) and 2(e), accepts the redundancy payment in full accord and satisfaction of all suits, actions, causes of action and other claims or demands whatsoever arising out of his/her employment and the termination of that employment.
(c)… (not relevant).
(d)… (not relevant).
(e)does not hereby release or discharge the Crown from any liability which has arisen or may arise in connection with the said employment to -
(i)pay workers' compensation or pay damages for personal injuries at common law; or
(ii)make good the underpayment of wages, salaries or other entitlements."
The findings at trial
The learned trial judge made the following findings at trial:
· the appellant's employment was a continuous one from 1988 until 8 November 1991 and there was no discrete period of employment between 4 November 1991 and 8 November 1991;
· upon its proper construction, the deed of release referred to the whole of the period of the appellant's employment;
· the appellant was not induced by any representation that may have been made by the Crown with respect to the status of the 1988 contract of employment and it was therefore unnecessary to consider further the issues arising out of the plea that there had been misrepresentations;
· even if the reply had raised the issue of unconscionable conduct, no basis for the grant of equitable relief had been made out as the appellant had not been threatened by the Crown, was not under a special disability which would entitle the Court to set aside the deed of release as unconscionable, and had not been in an unequal relationship with the Crown.
Two days' leave
The learned trial judge made other findings which require a recitation of some further facts.
As already mentioned, the appellant left his office on 16 October 1991, believing that his claim had been settled. As also mentioned, the appellant agreed with the Secretary of the Department of Construction that in order not to put his claim to recalculation, he would treat 15 and 16 October 1991 as days on leave, even though he had in fact been at work. This arrangement had the effect of reducing his leave entitlement by two days. However, as noted, "the settlement" on 16 October 1991 did not come into effect, but the appellant's leave entitlement was still debited with those two days and the appellant has never been given pay in lieu of leave for those two days. By the statement of claim, par42(4), the appellant claimed for salary for those two days in the following terms:
"(4) Leave Losses (arising from the Agreement of 16 Oct 1991)
(a) 2 days backdated leave (15 and 16 Oct 1991)
at $222 per day gross salary = $ 444
(b) …
(c) …"
The learned trial judge held:
· That upon its proper construction, the deed of release, cl 2(e)(ii) did not apply to the appellant's claim for damages for breach of the 1988 contract (as he had contended at trial) nor did it apply to any claimed breach of any alleged 1991 settlement agreement. His Honour held that cl 2(e)(ii) applied to "some erroneous mathematical or formularistic calculation [that] has been applied to assess the payment to an employee of past salary instalments which can subsequently be shown by reference to plainly applicable and objectively identifiable criteria to be wrong".
· That the claim for payment in lieu of leave on 15 and 16 October 1991 (recoverable pursuant to the deed of release, cl 2(e)(ii)), was only pleaded as one head of damages for breach of the alleged 1991 agreement of settlement.
· That, in any event, the appellant's execution of the deed of release on 11 October 1991 in the knowledge that he had worked on those two days, "constituted an effective accord and satisfaction" for any claim with respect to those two days.
The appeal
The appellant's notice of appeal contains 11 grounds and challenges all the findings made by the learned trial judge and referred to above. It is convenient to deal with the appellant's appeal on the basis of the submissions he made, rather than on the basis of each ground of appeal.
The appellant's first submission was that the failure of the Crown to pay his salary in lieu of two days' leave was a breach of the deed of release, cl 2(e)(ii), and such breach rendered the deed unenforceable. The learned trial judge found, as a fact, that in the calculation of the appellant's entitlements as at 8 November 1991 when his employment came to an end, neither allowance nor payment had been made for 15 and 16 October 1991, the days upon which the appellant worked, but which he agreed to treat as leave for the purpose of trying to achieve settlement of his claim on 16 October. It seems to me that this claim falls entirely within the provisions of the deed, cl 2(e)(ii) being an "erroneous mathematical or formularistic calculation [that] has been applied to assess the payment to [the appellant] of past salary instalments and subsequently [has been] shown by reference to plainly applicable and objectively identifiable criteria to be wrong".
On the hearing of the appeal, the appellant made it clear that he did not rely upon the breach of cl 2(e)(ii) simply to justify a conclusion that he was entitled to two days' pay in lieu of leave, but to support his submission that the breach deprived the deed of release of the effect prescribed by cl 2(b), namely, acceptance of "the redundancy payment in full accord and satisfaction of all suits, actions, causes of action and other claims or demands whatsoever arising out of his/her employment and the termination of that employment".
It is clear from the whole of the provisions of the deed of release that cl 2(e)(ii) is not a condition precedent for the operation of the preceding clauses as was contended by the appellant; cf Perri v Coolangatta Investments Pty Ltd (1982) 149 CLR 537. Although the release provisions in cl 2(b) of the deed are expressed to be subject (inter alia) to cl 2(e), it is plain that this means no more than the scope of the release provided by cl 2(b) is cut down to exclude any entitlement that may be found in the future to arise in the circumstances prescribed by cl 2(e). That this is the proper construction of the deed is reinforced by the provisions of cl 2(e)(i) which provides for the payment of entitlements which may not arise until after the deed has been executed and the redundancy payment made, eg, future weekly payments in respect of an incapacity for work that occurs in the future, but arises from a compensable injury sustained during the period of employment.
For the same reasons, it cannot be said that cl 2(e)(ii) is a condition, a breach of which amounts to an act of repudiation of the contract as a whole, for the right to rescind consequent upon repudiation depends upon the importance of the term "repudiated". See Laurinda Pty Ltd v Capalaba Shopping Centre Pty Ltd (1989) 166 CLR 623 at 641 - 642. See also Shevill v Builders Licensing Board (1982) 149 CLR 620, where Gibbs CJ said, at 625 - 626:
"We are of course concerned only with a case in which it is admitted that there was a valid and binding contract. Such a contract may be repudiated if one party renounces his liabilities under it - if he evinces an intention no longer to be bound by the contract (Freeth v Burr (1874) LR 9 CP 208, at p 213) or shows that he intends to fulfil the contract only in a manner substantially inconsistent with his obligations and not in any other way (Ross T Smyth & Co Ltd v T D Bailey, Son & Co (1940) 3 All ER 60, at p 72 ; Carr v J A Berriman Pty Ltd (1953) 89 CLR 327, 356 at p 351). In such a case the innocent party is entitled to accept the repudiation, thereby discharging himself from further performance, and sue for damages: Heyman v Darwins Ltd (1942) AC, at p 399."
With respect to the claimed breach of cl 2(e)(ii), the appellant next attacked the learned trial judge's finding that by executing the deed of release in the knowledge that he had not been paid for those two days leave, constituted an effective accord and satisfaction. The basis of the attack on that finding was that there was no evidence of any consideration necessary to support a valid accord and satisfaction.
It is true that on 16 October 1991 the appellant was prepared to accept the fiction that he had been on leave on 15 and 16 October, but such acceptance was only for the purpose of achieving the settlement of his claim as then discussed with the Secretary of the Department of Construction. When he was told on 30 October that such settlement would not proceed, it could not be said that, notwithstanding, the appellant abandoned in perpetuity, any claim that he may have had for pay or pay in lieu of leave for those two days.
The evidence was that the appellant did not receive his final pay and entitlements until after the deed of release had been executed. Accordingly, although the learned trial judge was correct when he said that when the appellant signed the deed he knew that in October he had agreed to the fiction that he had been on leave on 15 and 16 October, it is not correct that he knew at the time he signed the deed that he was not going to be paid for those two days. However, whether he knew that or not, the appellant's point that no consideration passed from him to the Crown to support a valid accord and satisfaction is established.
In McDermott v Black (1940) 63 CLR 161, Dixon J (as he then was) gave the following classic exposition on accord and satisfaction when he said, at 183 - 184:
"The essence of accord and satisfaction is the acceptance by the plaintiff of something in place of his cause of action. What he takes is a matter depending on his own consent or agreement. It may be a promise or contract or it may be the act or thing promised. But, whatever it is, until it is provided and accepted the cause of action remains alive and unimpaired. The accord is the agreement or consent to accept the satisfaction."
The consideration given by the appellant for the execution of the deed is expressed by the terms of the deed itself. Any claim for two days' pay or pay in lieu of leave was expressly excluded from the operation of the release by the provisions of cl 2(e)(ii) and there was no evidence that the appellant intended to forego such a claim.
However, this claim for two days' pay or pay in lieu of leave has never been pleaded as a breach of the term of the deed of release. It has always been claimed as a part of the damages arising from a breach of the alleged 1991 contract. No doubt this was no accident, for the appellant's primary claim was that the whole of the deed of release has no effect because it only applied to the period of employment between 4 and 8 November 1991, and/or because it is subject to a condition precedent that has not be fulfilled and/or because it has been revoked and the revocation accepted and/or because it has no effect by reason of misrepresentation made by the Crown. Although the learned trial judge fell into error when he found that there had been accord and satisfaction with respect to the failure to pay the appellant for 2 days in lieu of leave, nothing arises from this error as it was never an issue on the pleadings or at the trial that the appellant was entitled to recover 2 days' pay in lieu of leave pursuant to the deed of release cl 2(e)(ii).
The appellant's next submission was that the finding by the learned trial judge that he had not been induced to execute the deed of release by reason of misrepresentations by the Crown that his 1988 contract of employment was still in force was against the evidence and against the weight of the evidence. This submission is plainly not made out. As the learned trial judge said, throughout the whole of these proceedings the appellant steadfastly maintained that his contract of employment had been repudiated and the repudiation had been accepted by him in July 1991.
The only piece of evidence upon which the appellant relied to sustain this argument appears in his evidence-in-chief when he said:
"Despite my personal and strongly worded objections to the Crown's conduct at that time I did not know the real status of my employment. I lacked the knowledge and the information and I was no longer receiving pro bono advice from Mr Melick and I had to assume, and did, that the Crown was truthfully representing the law on the 6 November [the day he accepted the redundancy package] and on that day I therefore executed the statement of intent."
A little further on in his evidence-in-chief, the appellant said:
"On the basis of the Crown's representation that the contract remained in effect, I executed the deed on the 11th of November 1991 and returned it to the department."
However, that passage in the appellant's evidence-in-chief was contradicted in his cross-examination when he said that he had consistently believed that the Crown's assertion that his contract of employment had not been terminated was incorrect. He said that he had maintained that view through to 8 November 1991. In a letter the appellant wrote to the Secretary of the Department of Construction on 3 November 1991 (Exhibit P70), he asserted that his contract of employment had been repudiated by the Crown. A file note dated 4 November 1991 sets out an outline of a discussion between the Secretary and the appellant. The file note refers to the appellant's letter of 3 November and states that the appellant does not want to make any decision until there has been a response to that letter. On 6 November, the appellant was formally offered the redundancy option. The appellant's response, also of 6 November, is written in terms that make it clear that he firmly maintained the view that he had frequently expressed, that his contract of employment had been repudiated. The letter complains of "intransigence" by the Department which leaves him "a choice between the package as it is without any consideration of contract entitlements or natural justice …". This letter encloses his formal acceptance of redundancy.
The learned trial judge's finding that "[the appellant's] decision to execute the deed and accept the moneys provided for therein was not induced by any representations made by the Crown", was the only finding reasonably open on the totality of the evidence.
It follows that it is unnecessary to consider any further the claim that for some legal reason the deed of release has no effect by reason of misrepresentations as pleaded in the reply.
The appellant's claim that the employment referred to in the deed of release is employment limited to the period commencing on 4 November 1991 and ending on 8 November 1991 is plainly wrong. Such a construction is contrary to the amount paid for a release of all the claims, it is contrary to the provisions of cl 2(e) and it is contrary to the "matrix" of facts in which the deed was executed.
In argument on the hearing of the appeal, the appellant also submitted that the learned trial judge erred in not finding that a binding settlement agreement had been made between the appellant and the Secretary of the Department of Construction on 16 October 1991. The learned trial judge made no finding with respect to this claim. It was unnecessary for him to do so, having regard to his findings with respect to the deed of release. No fault can be found with this approach which should be followed on the appeal.
In addition, the appellant addressed a number of other issues, such as damages, which, in view of the foregoing are also unnecessary to consider.
Accordingly, I am of the opinion that the learned trial judge's conclusion was correct and that the appeal should be dismissed.
File No FCA 72/1999
WILLIAM DUDLEY KAVANAGH v STATE OF TASMANIA
REASONS FOR JUDGMENT FULL COURT
EVANS J
17 May 2000
I have had the advantage of reading the reasons for judgment prepared by Underwood J. I agree with them and his conclusion that the appeal should be dismissed.
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