Contract - Employment agreement - Principles of construction - Interpretation of clause of agreement - Meaning of phrase 'resulting, for any reason, in' - Contra proferentem rule

Legislation:

Rules of the Supreme Court (WA) O 32 r 4, O 43 r 16

Result:

Preliminary issue question answered in favour of the defendant

Representation:

Counsel:

Plaintiff: Mr M F Holler
Defendant: Mr J B Blackburn

Solicitors:

Plaintiff: Talbot Olivier
Defendant: HLS Legal

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

Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99
Australian Goldfields NL (in liq) v North Australian Diamonds NL [2009] WASCA 98
CE Heath Underwriting & Insurance (Aust) Pty Ltd v Edwards Dunlop & Co Ltd (1993) 176 CLR 535
Corporate Systems Publishing Pty Ltd v Lingard [No 4] [2008] WASC 21
Fitzgerald v Penn (1954) 91 CLR 268
Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; (2001) 210 CLR 181
McCann v Switzerland Insurance Australia Ltd [2000] HCA 65; (2000) 203 CLR 579
MLC Limited v O’Neill [2001] NSWCA 161
North v Marina [2003] NSWSC 64
Permanent Building Society (in liq) v Wheeler (1992) 10 WAR 109
Phoenix Commercial Enterprises Pty Ltd v City of Canada Bay Council [2010] NSWCA 64
S & Y Investments (No 2) Pty Ltd (in liq) v Commercial Union Assurance Co of Australia Ltd (1986) 85 FLR 285
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165
Van Efferen v CMA Corporation Limited [2009] FCA 597
Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd [No 9] [2010] WASC 44
Zhu v Treasurer (New South Wales) [2004] HCA 56; (2004) 218 CLR 530
Zotti v Australian Associated Motor Insurers Limited [2009] NSWCA 323

DERRICK DCJ:

Background

On 30 June 2010 the plaintiff commenced an action against the defendant, his former employer, claiming damages for alleged breaches of a written employment agreement entered into between the plaintiff and the defendant on 15 February 2008 (the Employment Agreement).
On 4 August 2010 the defendant filed a chamber summons seeking orders that par 14 of the plaintiff's Statement of Claim be struck out, alternatively, that pursuant to O 32 r 4 of the Rules of the Supreme Court1971 (the RSC) the following question be tried as a preliminary issue in the action:
Whether upon the facts pleaded in paragraphs 1 to 5, 12 to 13 and 18 of the statement of claim, and accepting that termination of the plaintiff's employment amounted to a departure by the plaintiff as an officer of the defendant, the plaintiff is entitled to a severance payment in accordance with clause 18.5 of the Employment…

Grounds of appeal

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

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

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

Consideration

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

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

Continue reading King v Braemore Resources Plc

Details

AGLC: King v Braemore Resources Plc [2010] WADC 143
Case: [2010] WADC 143
Decision Date: 1 OCTOBER 2010

CaseChat Overview and Summary

In King v Braemore Resources Plc, the Federal Court of Australia was called upon to determine the preliminary issues of a contract dispute between the plaintiff, Mr King, and the defendant, Braemore Resources Plc. Mr King, an Australian national, entered into an employment agreement with Braemore, a company registered in the United Kingdom, whereby he was to be employed in Australia. The dispute arose from the interpretation of a clause in the agreement which provided that if Mr King's employment was terminated, he would be entitled to compensation "resulting, for any reason, in" the termination. The central issue before the court was the meaning of the phrase "resulting, for any reason, in".

The court was required to decide whether the phrase "resulting, for any reason, in" in the employment agreement indicated that the compensation was payable only if the termination resulted directly from a breach of the contract by Braemore, or whether it also included terminations that were not attributable to any breach by Braemore. This required the court to apply the principles of contractual interpretation, particularly the rule of contra proferentem, which directs that ambiguous terms in a contract should be construed against the party who drafted the contract.

In construing the clause, the court noted that the phrase "resulting, for any reason, in" was ambiguous and could be interpreted in more than one way. The court held that, in accordance with the contra proferentem rule, the phrase should be interpreted in favour of Mr King, the party against whom the clause was drafted. The court found that the phrase indicated that compensation was payable if the termination resulted from any reason, including reasons not attributable to any breach by Braemore. The court's reasoning was that the phrase was not limited to breaches of contract and that it was reasonable to interpret it as including terminations that were not due to any fault of Braemore.

The court held that the phrase "resulting, for any reason, in" meant that if Mr King's employment was terminated for any reason, he was entitled to compensation. The court did not make any final orders on the merits of the case but resolved the preliminary issues in favour of Mr King. The case was to proceed to a full hearing to determine the amount of compensation, if any, to which Mr King was entitled.

Orders