| JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA LOCATION : BROOME CITATION : MARTIN -v- CADENG PTY LTD [2011] WADC 73 CORAM : DAVIS DCJ HEARD : 13 15 DECEMBER 2010 DELIVERED : 11 MAY 2011 FILE NO/S : BRO CIV 1 of 2009 BETWEEN : DENNIS MARTIN Plaintiff
AND
CADENG PTY LTD
First Defendant
BROOME MINING SERVICES PTY LTD
Second Defendant
Catchwords: Contract Employment contract Termination Whether employee repudiated employment contract Whether employer entitled to terminate or in breach of employment contract Whether an agreement for bonus payment Postcontractual conduct Turns on own facts Legislation: Civil Judgments Enforcement Act 2004, s 8
Civil Judgments Enforcement Regulations 2005, cl 4
Evidence Act 1906, s 32
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Rules of the Supreme Court 1971, O 36, r 20
Supreme Court Act 1935, s 32 Result: Plaintiff's claim upheld in part
Damages awarded to plaintiff against first defendant for wrongful termination of employment contract
Claim against second defendant dismissed Representation: Counsel:
Plaintiff : Mr G T Stubbs
First Defendant : Mr A J Power
Second Defendant : Mr A J Power
Solicitors:
Plaintiff : Julia Barber & Co (Legal) Pty Ltd
First Defendant : Norton Rose Australia
Second Defendant : Norton Rose Australia
Case(s) referred to in judgment(s):
Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153
Byrne v Australian Airlines Ltd (1995) 185 CLR 410
Fightvision Pty Ltd v Onisforou (1999) 47 NSWLR 473
Garbett v Midland Brick Company Pty Ltd [2003] WASCA 36
Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11,110
Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61; (2007) 233 CLR 115
Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623
McMahon v National Foods Milk Ltd [2009] VSCA 153; (2009) 259 ALR 20
Morrison v Town of Victoria Park [2007] WASCA 164
Olsson v Dyson (1969) 120 CLR 365
Reilly v Praxa Ltd [2004] ACTSC 41
Rogan-Gardiner v Woolworths Ltd [No 2] [2010] WASC 290
Ross T Smyth & Co Ltd v TD Bailey Son & Co [1940] 3 All ER 60
Wenham v Ella (1972) 127 CLR 454
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1 DAVIS DCJ: The plaintiff, Mr Martin, is a lawyer and accountant with experience in corporate banking and finance. In February 2002 he was asked by Mr Terence Bray, the sole director and shareholder of the first defendant, Cadeng Pty Ltd, to undertake a review of that company's finances. The review was anticipated to take only two weeks, but Mr Martin stayed working with Mr Bray for another seven and a half years.
2 Mr Martin held the position of financial controller and administration manager, first for Cadeng and then also for an associated company, Broome Mining Pty Ltd, the second defendant. A written employment contract dated 28 December 2005 was signed by Mr Bray confirming Mr Martin's employment by the two companies, Cadeng and Broome Mining, until 3 January 2011. 3 Mr Martin and Mr Bray had a good working relationship between them over the years. Mr Martin was in charge of and managed the financial affairs. Mr Bray oversaw all the business activities. 4 By April 2009, however, the relationship between Mr Martin and Mr Bray had begun to sour. By 8 July 2009 Mr Martin was on sick leave. A week later his employment had been terminated. 5 Mr Martin then commenced proceedings, alleging that in terminating his employment Cadeng and Broome Mining had breached the terms of the employment contract. Mr Martin also claimed a bonus payment of $150,000 which he alleged that Mr Bray, on behalf of Cadeng, negotiated and agreed to between April 2007 and April 2008. The bonus was to be paid by 30 June 2008. 6 Cadeng and Broome Mining denied that they breached the employment contract or that there was any agreement to pay a bonus of $150,000 to Mr Martin. They alleged that as from 1 July 2009 Mr Martin was employed only by Cadeng, and not Broome Mining, and that the termination of Mr Martin's employment followed Mr Martin's repudiation of the employment contract. It was said that by a letter dated 9 July 2009, which was written by Mr Martin's solicitor on his behalf, Mr Martin evinced an unwillingness or inability to continue in his employment and a plain intention not to be bound by the contract. Mr Martin's repudiation of his employment contract was accepted by letter from Cadeng's solicitors dated 14 July 2009. (Page 4)
The issues 7 The issues in this case relevant to liability are: 1. Was there an agreement made that a bonus of $150,000 would be paid on or before 30 June 2008 by Cadeng to Mr Martin? 2. Who employed Mr Martin from 1 July 2009? Was it Cadeng alone or Cadeng and Broome Mining jointly? (All parties agreed that before 1 July 2009 Cadeng and Broome Mining jointly employed Mr Martin). 3. How did the contract of employment come to an end? Did Cadeng wrongfully terminate the contract (either on its own behalf or also on behalf of Broome Mining), without notice, as is alleged by Mr Martin, or did Mr Martin repudiate the contract of employment, which repudiation was accepted by Cadeng (either on its own behalf or also on behalf of Broome Mining)? 8 During the course of the trial a further breach of the employment contract by Cadeng and Broome Mining was raised by counsel for Mr Martin. This further breach related to a claim that after 8 July 2009 Mr Martin was not paid his full salary. 9 The parties also raised issues of credibility in respect of each of Mr Martin and Mr Bray. There were factors which in my view affected the credibility of each of them on certain aspects of their evidence. I will address credibility in discussing each of the issues. 10 I propose to deal first with the issue of who employed Mr Martin from and after 1 July 2009, as the background and findings which I make on that issue have a bearing, to some extent, on the other issues.
Who employed Mr Martin from and after 1 July 2009? 11 It was agreed during discussions which I had with counsel for all parties after the first day of the trial that I should proceed to determine the issue of who employed Mr Martin from 1 July 2009 on the basis of whether or not there had been a variation to or a novation of the employment contract. 12 While neither a variation nor novation had been specifically pleaded in the defence, it had been pleaded that from 1 July 2009 Cadeng had (Page 5)
employed Mr Martin 'on an exclusive basis'. When providing answers to a request for further and better particulars of that pleading, it was stated that Mr Martin and Mr Bray, on behalf of Cadeng and Broome Mining, agreed to vary the contract. The agreement to vary was, it was said, established by a request from Mr Martin by an email of 22 April 2009, which was agreed to by Mr Bray in his return email on the same day, and by the conduct of Mr Martin in completing a tax file number declaration form on 1 July 2009. 13 A variation to a contract may be inferred from the conduct of the parties: Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153, [71] [80]; Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11,110, 11,117 11,118. 14 Novation is a transaction by which all parties to a contract agree that a new contract is substituted for one that has already been made. Novation involves the extinguishment of one obligation and the creation of a substitute obligation in its place: see Olsson v Dyson (1969) 120 CLR 365, 388; Fightvision Pty Ltd v Onisforou (1999) 47 NSWLR 473 [78]. The consideration is the discharge of the old contract: Olsson v Dyson. Whether there is a novation depends on the intention of the parties. A novation may be express or implied from the circumstances and can be inferred from the conduct of the parties. There is no need for express words: see Olsson v Dyson (390) (Windeyer J). When searching for any intention to novate, no narrow or pedantic approach should be taken: Fightvision Pty Ltd v Onisforou [86]; McMahon v National Foods Milk Ltd [2009] VSCA 153 [77] [80]; (2009) 259 ALR 20. 15 The evidence from Mr Martin, which was either not disputed or agreed to by him in cross-examination, is as follows. 16 Cadeng carried on business, from Broome, in three main areas. The first business activity was steel fabrication, the second was machining (which Mr Martin described as machining components or parts, again in steel, and aimed at heavy industry) and the third was labour supply or labour hire to a mining company. 17 In 2003 the company Broome Mining was formed. Mr Bray's mother was the sole director and shareholder of Broome Mining. One of the reasons why Broome Mining was established was to reduce Cadeng's payroll tax. (Page 6)
18 All personnel required by Cadeng for its businesses, including its office staff, was provided by Broome Mining, which then invoiced Cadeng for the cost of that personnel. Cadeng then reimbursed that cost to Broome Mining. Broome Mining had no other business. 19 Mr Martin completed a new tax file declaration, with the payer or employer described as Broome Mining, on 31 December 2003. 20 Mr Martin drafted the employment contract dated 28 December 2005. Mr Bray signed the contract without asking any questions or requesting any changes and he did so on behalf of both Cadeng and Broome Mining. 21 There was no issue that Mr Bray could bind Broome Mining in relation to this employment contract. A formal admission, pursuant to s 32 of the Evidence Act1906, was made by Mr Martin that from 18 July 2003 Mr Bray had the authority to act on behalf of Broome Mining in all matters relating to Mr Martin's employment. 22 In 2008 the global financial crisis had affected some of the major mining companies with which Cadeng had contracts, which in turn affected Cadeng's business. Mr Martin's unchallenged evidence was that Cadeng had lost a contract for its fabrication work during 2008. Early in 2009 Mr Martin realized that a calculation he had made that Cadeng would run out of fabrication work by June 2009 was incorrect; that work would run out in February 2009. Cadeng was able to obtain another fabrication contract with another mining company, but that company advised two weeks later that there would be no more fabrication. Mr Martin stated that he immediately drew up a contingency plan and revamped cash flow models and put a case forward to Mr Bray, with recommendations. 23 Mr Martin made recommendations relating to cost cutting, including reducing labour costs. He made recommendations on how many people Cadeng could continue to employ in the workshop without any substantive fabrication work, the 'shutting down' of fringe benefits to a number of people in Cadeng (including himself) and the reduction or cessation of what Mr Martin described as 'non-core' expenditure of Cadeng, a juice bar and restaurant business in Barbados. 24 One of the measures undertaken to deal with the downturn in Cadeng's business was the merging of the payrolls of Broome Mining and Cadeng. By an email dated 22 April 2009 Mr Martin suggested that: (Page 7)
It would be useful and help simplify and reduce administration, if Broome Mining Services Payroll was merged with Cadeng and there was only one weekly payroll process. If a couple of people are going to drop off the payroll, this makes even more sense. Payroll Tax in Cadeng is paid monthly, so there is no accrued liability here. The accrued Payroll Tax in Broome Mining Services could be paid out to zero. This would also mean there will be a workers' compensation reimbursement due to Broome Mining Services in October, after the current Workers Comp period ends. Cadeng would then continue to remit Payroll Tax monthly. 25 Mr Bray responded by email on the same day, saying: That makes sense, but what issue, if any, does it leave with BMS if production required it again. 26 Mr Martin immediately responded by saying that there was no issue at all, BMS (Broome Mining Services) will submit an annual return as normal and: There will be no liabilities in the company, the annual return is made as usual, and the company can recommence activity any time it chooses. 27 I find that the express words of the first email from Mr Martin on 22 April 2009 show that he intended Broome Mining to cease activity, with the consequence that accrued payroll tax would be reduced to zero and it would receive reimbursement of workers compensation premiums which had been paid to October. The last email also confirms that once employees with Broome Mining were transferred to Cadeng's payroll, Broome Mining would cease any activity. In cross-examination Mr Martin agreed that as at 30 June 2009 Broome Mining ceased to conduct any business activity and indeed had ceased to conduct any business activity some time before. 28 On 1 July 2009 Mr Martin completed and signed a new tax file declaration, with the payer described as Cadeng. From 1 July 2009 Cadeng paid Mr Martin's salary and all other employees' wages. A PAYG summary for the year ended 30 June 2010 confirmed payments made by Cadeng to Mr Martin from 1 July 2009. (Page 8)
29 It was not long after 1 July 2009 that Mr Martin consulted his solicitor concerning his employment contract. The solicitor wrote the letter dated 9 July 2009 to Mr Bray, as director of Cadeng. This letter was, as Mr Martin confirmed in his evidence at trial, written in accordance with his instructions (as he stated in examination-in-chief: ts 49) and was accurate (as he eventually, after avoiding answering questions about this, conceded in cross-examination: ts 77). The letter specifically stated: I have been consulted by Mr Dennis Martin regarding his employment with Cadeng Pty Ltd ('the Company') … 30 The letter of 9 July 2009, when taken with the other evidence I have already outlined, in my view confirms that from 1 July 2009 there was, with the consent of all parties concerned, a change in Mr Martin's employer, from Cadeng and Broome Mining jointly to Cadeng alone. 31 It was submitted on behalf of Mr Martin that there had been no variation or novation of the employment contract and that both Cadeng and Broome Mining continued to employ him after 1 July 2009. During his evidence Mr Martin stated that the changing of the payroll was not intended to affect anyone's terms of employment, but was only an 'administrative switchover'. He also stated that when he signed the tax file number declaration on 1 July 2009 he did so to reflect the 'tidying up of pulling the handful of employees into the one company for payroll purposes' [sic]. It was accordingly submitted that all that had occurred after 1 July 2009 was that there was a payroll change, in other words a change in the payer of Mr Martin's salary. 32 In light of the evidence of the intention of both Mr Martin and Mr Bray at the relevant time, I place little weight on Mr Martin's evidence given at trial some time after the event, and which in my view was not factual, but in the nature of argument and submission. I am also unable to accept the submission that the change made was only a payroll change. 33 The evidence of contemporaneous events establishes that Mr Martin and Mr Bray intended that Cadeng would assume responsibility for all of Broome Mining's employees from 1 July 2009 and Broome Mining would thereafter cease all activity and, in fact, it did cease all activity. 34 I am satisfied, on the balance of probabilities, that it was the intention of both Mr Martin and Mr Bray (on behalf of Cadeng and Broome Mining) to substitute Cadeng as the sole employer of Mr Martin and that is in fact what occurred. As there was a substitution of a party (Page 9)
and no other variation to the terms of the employment contract, which remained unchanged, I find that there was a novation of the employment contract: Fightvision Pty Ltd v Onisforou[80] and [86]; McMahon v National Foods Milk Ltd. The employment contract, the parties to which had been Mr Martin, Cadeng and Broome Mining ended and, effective from 1 July 2009, a new contract on the same terms was made between Mr Martin and Cadeng as his employer. 35 It follows from my findings that as at 1 July 2009, Cadeng was the sole employer of Mr Martin.
Was Cadeng entitled to terminate the employment contract? 36 When I refer to 'the employment contract' relevant to the issue of the termination of that contract, I mean the employment contract, as novated, between Mr Martin and Cadeng. 37 The express terms of the employment contract, cl 16, permitted Cadeng to terminate Mr Martin's employment by giving 12 months' notice or payment of 12 months' salary in lieu of notice. There was a right given to Cadeng to summarily terminate Mr Martin's employment contract in four specified situations, none of which arises in this case. 38 Cadeng terminated the employment contract by the letter from its solicitors dated 14 July 2009, following the letter from Mr Martin's solicitor of 9 July 2009. There is no issue that the letter of 14 July 2009 did (rightly or wrongly) terminate the employment contract: see also Byrne v Australian Airlines Ltd (1995) 185 CLR 410, 428. There is also no dispute that when Cadeng terminated Mr Martin's employment, the termination took place without notice or payment in lieu of notice. The issue is whether Cadeng was entitled to so terminate because the letter of 9 July 2009 was a repudiation by Mr Martin of the employment contract. 39 The main body of the letter of 9 July 2009 is set out in the Schedule to these reasons. I have numbered the paragraphs of the letter for ease of reference later in these reasons. 40 A 'repudiation' by one party to a contract, that is conduct by that party which evinces an intention no longer to be bound by the contract, will entitle the other party to terminate the contract. As was stated in Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd [2007] HCA 61; (2007) 233 CLR 115 [44] [49] repudiation may come in many forms. It may come in the form of a breach of contract which justifies termination by the other party (whether the breach is of an (Page 10)
essential or non-essential term). There may also be conduct which in Koompahtoo, [44] was described as 'renunciation', that is: … conduct which evinces an unwillingness or an inability to render substantial performance of the contract. This is sometimes described as conduct of a party which evinces an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with the party’s obligations. It may be termed renunciation. The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it. 41 It is in this sense of 'renunciation' that I am to determine the issue raised in this case, as there is no suggestion that there was any breach of the employment contract by Mr Martin. 42 An allegation of repudiation of contract does not involve an assertion that the alleged repudiator subjectively intended to repudiate his obligations. An issue of repudiation turns upon objective acts and omissions and not upon uncommunicated intention: Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623, 657 658 (Deane and Dawson JJ). 43 It has also been said that repudiation is 'a serious matter, not to be lightly found or inferred': Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd, citing Lord Wright from Ross T Smyth & Co Ltd v TD Bailey Son & Co[1940] 3 All ER 60, 71. 44 It was also said in Koompahtoo[44] that unwillingness or inability to perform a contract often is manifested most clearly by the conduct of a party when the time for performance arrives. 45 The issue of renunciation in this case turns on whether, viewed objectively, the letter written by Mr Martin's solicitors dated 9 July 2009 was such as to convey to a reasonable person, in the situation of Cadeng, renunciation either of the employment contract as a whole or of a fundamental obligation under it. 46 It is necessary to review the background to the exchange of the two letters dated 9 July 2009 and 14 July 2009. 47 The evidence establishes that before early 2009 Mr Martin and Mr Bray had a good relationship. Mr Bray took advice and direction from Mr Martin concerning the financial affairs of the business activities undertaken at the relevant times by either or both of Cadeng and Broome (Page 11)
Mining. Mr Bray trusted Mr Martin and Mr Martin took a prominent role in dealing both with the companies' accountants and bankers. 48 There was no issue from either Mr Martin or Mr Bray that in 2009 the relationship between them began to deteriorate. Mr Martin gave evidence that he became very concerned when Mr Bray did not follow his recommendations to cease the 'non-core' expenditure of Cadeng on the business in Barbados. Mr Bray had a particular personal interest in this business, often travelling overseas and spending time there. Mr Martin agreed that he was unhappy that company funds were being used to establish and support that business when he thought those funds could be better used in Broome. As Mr Martin described it, he was under the strain of knowing he could not control the expenditure in Barbados and that started to have a serious effect on him and impinged in a serious way on his relationship with Mr Bray. 49 Mr Martin had always dealt with Cadeng's bankers. In fact it was a term of the bank's financing of Cadeng's business that he remain employed in the position of Cadeng's financial controller. In 2009 when Cadeng had lost its fabrication work, Mr Martin prepared financial models or forecasts for the bank, as he was concerned that Cadeng was heading for a default on certain clauses in its loan agreement. He made a submission to the bank and had arranged a meeting at the bank on 30 April 2009. At some time in April, Mr Bray informed Mr Martin that he would attend that meeting, without him. 50 In cross-examination Mr Martin agreed that in some of his financial models or scenarios he had prepared to ensure the survival of Cadeng's business, he had put himself up as someone who might cease working with the company. However, that did not happen. After Mr Bray's meeting with the bank, one of the terms of the bank continuing to provide finance to Cadeng was that Mr Martin remained employed as financial controller. 51 Mr Martin continued to work after April 2009, although he described his relationship with Mr Bray as having 'deteriorated completely', with most communication between them by email, a change from the way they had previously communicated. By late June or early July 2009 Mr Martin was receiving emails from Mr Bray which, according to Mr Martin, alleged that he had breached company policy in certain respects. While these emails were not produced at trial, the letter of 9 July 2009 referred to these emails and the subject matter of some of them (par 4 to par 8). (Page 12)
52 Mr Martin described himself as unhappy and in a distressed frame of mind and said that he knew he was unwell. He consulted his doctor and on 8 July 2009 obtained a medical certificate, certifying that he was unwell, was receiving medical treatment and would be unfit for work until 22 July 2009. Mr Martin personally delivered that medical certificate to the office of Cadeng on the same day. 53 The next communication Mr Martin had with Mr Bray was through his solicitor by the letter of 9 July 2009. The response from Cadeng by the letter dated 14 July 2009 was swift and definite. 54 Applying Koompahtoo, Cadeng's response to the letter of 9 July 2009 must be looked at from the position of Cadeng and what was known by it, through its director Mr Bray, at the relevant time. 55 Mr Bray in his evidence agreed that in 2009 his relationship with Mr Martin began to sour. Mr Bray recalled that after he had returned from Barbados, at the beginning of April 2009 he had a discussion with Mr Martin, who wanted Mr Bray to stop his support of the business in Barbados. Mr Bray said he could not just stop it, but had to do it slowly. Mr Martin was not happy about that. Mr Bray's evidence was that Mr Martin 'got angry and raised his voice, telling me that I wanted him to quit'. Mr Bray said he told Mr Martin he didn't want him to leave, but wanted him to stay. Mr Martin said that he was having mental anguish, to which Mr Bray responded to the effect that if Mr Martin was sick, he should take sick leave. 56 Mr Bray explained the reason he wanted Mr Martin to stay. Mr Bray believed he needed Mr Martin's financial skills 'because I don't have good financial skills; I don't have good bookkeeping skills. I'm a fitter and machinist. My skills lie in the design and the manufacture of components'. 57 After this meeting between the two men in April 2009, verbal communications from Mr Martin became, in Mr Bray's view 'aggressive' and their communications were mainly confined to email correspondence in order to avoid confrontation. Any face to face discussions were brief and 'blunt'. Mr Bray agreed in cross-examination that he did start issuing emails to Mr Martin about breaches of company policy. Mr Bray suggested that this was because emails were their 'preferred choice of communication'. 58 Consistent with Mr Martin's evidence, Mr Bray gave evidence that Mr Martin had prepared a submission to the bank. Mr Bray disagreed (Page 13)
with the cash flow which Mr Martin had prepared and told Mr Martin not to submit it. Mr Bray said he would revise it, which he did, submitting it to Mr Martin and then the bank. I had some difficulty with this evidence from Mr Bray, considering that only minutes before, he had explained he did not have good financial or bookkeeping skills. In cross-examination he explained that Mr Martin had left out some fabrication components and work that Cadeng had contracted and was ready to do. 59 Mr Bray attended the meeting with the bank on 30 April 2009. Mr Bray agreed that one of the terms of the bank's continued funding to Cadeng was that Mr Martin's employment by Cadeng was to continue, the exact term reading 'Financial management for company is to remain under the control of Dennis Martin, at least until the expiry of his current employment contract, with any proposed change to be discussed and approved by [name of bank] prior to implementation'. 60 Mr Bray gave the following evidence about another discussion he had with Mr Martin about the financial models in which Mr Martin had suggested that his position become redundant: Yesterday Mr Martin told her Honour that in the months leading up to June 2009 he had performed some modelling to see how the business could survive, and in that modelling one of the scenarios that he put up was that his position become redundant?---That's correct. Did you see that modelling?---I did. Was there any discussion between him and you about those models?---Yes. He pointed out that that would be a nice end and I said, 'That's not going to happen.' Why did you have that view?---Because I needed Dennis. Did you tell him that?---Yes, I did. What did you say?---I said, 'I'm not having that. We still need you.' Did he respond?---He said, 'I know.' 61 When the substance of this conversation was put to Mr Martin in cross-examination he denied Mr Bray had said that he wanted Mr Martin to stay and continue working as the financial controller of the business. I consider Mr Bray's evidence concerning this conversation was credible and reliable and I find that this discussion did take place. 62 After Mr Martin had attended Cadeng's office on 8 July 2009 and delivered his medical certificate, Mr Bray became aware of that medical (Page 14)
certificate, accepted it and told staff that Mr Martin was on sick leave. Mr Bray explained that he accepted the medical certificate because Mr Martin had said that he was having mental anguish and Mr Bray had told him to take sick leave if he was sick. 63 I find that as at 14 July 2009 the position as known by Cadeng, through its director Mr Bray, was that: 1. From April 2009 there was a real difference of opinion between Mr Bray and Mr Martin concerning the Barbados business and the use of Cadeng's money to support that business; 2. Mr Bray took over the role that Mr Martin had previously undertaken in dealing with Cadeng's bankers in April 2009, but otherwise Mr Martin continued to work for Cadeng; 3. Mr Bray told Mr Martin on more than one occasion between April and June 2009 that Cadeng needed Mr Martin to stay in his role as financial controller. Cadeng's bank also expected Mr Martin's employment to continue and, indeed, required this as one of the terms of the bank's continued funding to Cadeng; 4. The relationship between the two men deteriorated, with communications between them largely taking place by email. Some of Mr Bray's email communications raised matters of company policy; 5. Mr Martin was not happy and was suffering, as Mr Bray described it, 'mental anguish'. Mr Martin submitted a medical certificate on 8 July 2009, which Mr Bray accepted, telling staff that Mr Martin was on sick leave. 64 With that position as known by Cadeng, it is necessary to construe what was stated in the letter of 9 July 2009 and relied upon by Cadeng as entitling it to terminate the employment contract. 65 The submission made on behalf of Cadeng is that the letter of 9 July 2009 made it clear that Mr Martin considered his position was redundant and that as a result, he had certain entitlements. That claim for entitlements is set out in par 9 of the letter of 9 July 2009. It follows the formula for a redundancy payment set out in cl 17 of the employment (Page 15)
contract. As it was put by counsel for Cadeng, however, those entitlements could only follow from the contention, set out in the letter, that Mr Martin had been effectively prevented from carrying out his usual functions. Mr Martin had not made this out and, therefore, the letter as a whole could only be construed as a repudiation (in the sense of a renunciation). In other words, to claim a redundancy was a demonstration of an unwillingness by Mr Martin to render substantial performance of the employment contract. 66 I agree that the letter of 9 July 2009 misstated the position in par 3 where it was said that Mr Bray had effectively prevented Mr Martin from carrying out his usual functions. That is not the evidence which I heard in this trial, even from Mr Martin. Mr Martin did continue in his employment and carried out his usual duties until he commenced sick leave on 8 July 2009. The only exception was the dealing with the bank, which Mr Bray took over. However, even when par 3 of the letter is taken with the reference to a redundancy payment in par 9, this does not in my opinion demonstrate a renunciation of the employment contract. The statements in the letter setting out that Mr Martin's position was redundant and claiming redundancy entitlements must be read in light of what was stated both before and after. In the previous paragraph, par 8, Cadeng was put on notice that any attempt to terminate Mr Martin's employment for supposed breaches would be 'brought to the attention of the relevant Commission'. That is a statement that Mr Martin did not want his employment terminated. The next paragraph which refers to redundancy entitlements could reasonably be understood as an offer by Mr Martin to take a redundancy payment in order to settle matters, particularly given the previously mentioned email communications from Mr Bray and Mr Martin's state of health. That is, in my view, confirmed by what is stated in par 9 about not intending to make an issue about leave loading due to him 'presuming the matter is settled amicably'. It is also confirmed by the next paragraphs, par 10 and par 11, which talk about Mr Martin not enforcing an oral contract if he received his entitlements, which I understand to refer to the redundancy entitlements set out in par 9, within 14 days. 67 As I have stated, repudiation of a contract is a serious matter, and I should not find or infer it lightly. I consider that when the letter of 9 July 2009 is viewed objectively, taking into account the circumstances known to Cadeng at the time, the letter was not such as to convey to a reasonable person, in the position of Cadeng, that Mr Martin was unwilling to continue with the employment contract. (Page 16)
68 Reasonableness required a person in Cadeng's situation to take into account that Mr Martin was not well and was on sick leave. Had Mr Martin intended no longer to be bound by the employment contract or to fulfil it only in a manner substantially inconsistent with his obligations under that contract, there would have been no need for him to obtain a medical certificate. 69 Reasonableness also required a person in Cadeng's position to look at the letter as a whole and what else was stated in the letter, including the statement in par 8 and what followed, as I have set out in [66]. 70 Reasonableness, in my view, from a person in Cadeng's position required a response other than the termination of Mr Martin's employment. Alternative responses open to Cadeng, in the circumstances known to it at the time, included: 1. waiting to review the matter upon Mr Martin's return from sick leave, after 22 July 2009. That date is, of course, when the time for Mr Martin's performance of the employment contract would arise, given that Cadeng had accepted Mr Martin's medical certificate; or 2. responding by saying that Mr Martin was wrong in his assertion that he had been prevented from performing his role to the extent that his position was redundant, and giving him an opportunity to correct that erroneous position - an option which would be called for given that Cadeng wanted him to stay as an employee; or 3. attempting to resolve the issues raised in the letter or respond to the offer made in the letter. 71 In my view, the letter dated 9 July 2009 provided no reasonable basis for Cadeng to treat what was said as a renunciation which entitled it to terminate the employment contract. A reasonable person in Cadeng's position would not have construed the letter in the way suggested in submissions, nor responded to the letter of 9 July 2009 by terminating Mr Martin's employment. 72 I find that Cadeng was not entitled to terminate the employment contract. In doing so, it breached the term of that contract requiring reasonable notice or payment in lieu of notice. Mr Martin is therefore entitled to damages, which I will assess after considering the next issues. (Page 17)
Was there a further breach of the employment contract? 73 An amendment to the pleadings made during the course of the trial raised the fact that after 8 July 2009 Mr Martin was not paid his full salary, but was paid at a reduced rate. Given my finding that Cadeng was not entitled to terminate the employment contract and in doing so was in breach, it is not strictly necessary that I deal with this alternative claim, but I will do so. 74 The claim was based on Cadeng's payment records which showed that for three weekly periods from 1 July to 21 July 2009 there had been a reduction in the weekly payments to Mr Martin, which was inconsistent with both the previous week ending 30 June 2009 and Mr Martin's annual salary. 75 In the first week of July 2009 the payment records showed a slight reduction in Mr Martin's weekly pay from 1 to 7 July 2009. The recorded payment is $3,276, down from $3,315 the previous week. In the second week from 8 to 14 July 2007 (which is the first relevant pay period, in light of the pleadings as amended) there was a further reduction of the pay to $2,697. In the third week, the week from 15 to 21 July 2007, Mr Martin's pay had reduced again, this time to $2,600. It is apparent that Mr Martin's salary was paid in arrears. 76 Counsel for Mr Martin submitted to me that the reduction of an employee's salary is a repudiatory breach of the employment contract by the employer, which repudiation could be accepted by the employee. If I was to find that the letter of 9 July 2009 was a renunciation of the employment agreement by Mr Martin, there had already been a repudiatory breach by Cadeng by the reduction in the payments made to Mr Martin. In those circumstances, I could treat Mr Martin's solicitor's letter of 9 July 2009 as reflecting an acceptance of that breach and a request for payment of damages. 77 I have a number of difficulties with this alternative claim and would not uphold it for the following reasons. 78 First, this submission as put was not pleaded in the amended statement of claim produced during the trial. In the case of Cadeng it was pleaded that by paying the salary at a reduced rate and/or the letter dated 14 July 2009, Cadeng terminated the employment agreement (par 16). In the case of Broome Mining, it was pleaded that by paying the salary at a reduced rate it had breached the employment agreement (par 17). There was no claim for damages or other relief pleaded by reason of that (Page 18)
breach and no claim that by paying Mr Martin's salary at a reduced rate, either defendant had repudiated the employment contract. 79 Secondly, Mr Martin gave evidence that he did not receive pay slips or a copy of the payment records which were in evidence. I am not able to conclude that he knew of the fact that he had been underpaid before the letter of 9 July 2009 was written by his solicitor. Certainly there was no mention at all in the letter of 9 July 2009 of any underpayment of Mr Martin's salary. 80 Thirdly, if the underpayment of Mr Martin's salary constituted a repudiation which Mr Martin could accept, there was no acceptance of this repudiation in the letter of 9 July 2009. I would not be prepared to stretch the construction of the letter of 9 July 2009 as counsel for Mr Martin submitted. 81 Finally, the underpayment of Mr Martin's salary as relevantly pleaded relates to what he received after he went on sick leave on 8 July 2009. As Mr Martin was paid weekly in arrears, he was next due to be paid for the week ending 14 July 2009. The underpayment of salary did not occur until, at the earliest, 14 July 2009, but judging from the payment record the date of payment appears to be 16 July 2009. Even accepting that the underpayment of salary constituted a repudiation by Cadeng of the employment contract, as the parties agreed at trial Cadeng's letter of 14 July 2009 terminated the contract. Whatever right to accept the repudiation Mr Martin might have had was rendered otiose by that termination.
The bonus of $150,000 – was there an agreement? 82 It was an express term of the employment contract, cl 6.2, that bonus or profit share arrangements will be negotiated with the Managing Director (Mr Bray) annually in June, based on the Cadeng annual return for the previous financial year. 83 When the employment contract was first entered into, Mr Martin's gross annual salary, plus superannuation, was $132,000. Mr Martin's gross salary increased until for the financial year 1 July 2008 to 30 June 2009 his gross annual salary was $174,362. 84 It was not in dispute that two bonuses were actually paid to Mr Martin. The first was in the sum of $30,012.20 paid on 3 September 2007. The second bonus of $49,757.31 was paid on 10 July 2008. (Page 19)
85 Mr Martin's claim as pleaded was that between April 2007 and April 2008 Mr Bray negotiated with Mr Martin about a bonus payment and as a result of those negotiations there had been an agreement by Mr Bray, on behalf of Cadeng, to make a bonus payment of $150,000 on or before 30 June 2008. 86 The letter of 9 July 2009 from Mr Martin's solicitor referred, in par 10, to bonuses and an agreement that bonuses and a substantial payment would be made to him when the business of Cadeng was sold. In the course of his evidence Mr Martin explained that this reference in the letter of 9 July 2009 did not relate to this claim for the bonus of $150,000. 87 Mr Martin gave no evidence of negotiations over the bonus and there was very little detail in his evidence about what was said to constitute the agreement by Cadeng to pay the bonus of $150,000. Submissions were made on behalf of Cadeng that Mr Martin had not proved that there was a meeting of the minds, constituting an agreement to pay this bonus. 88 As a matter of law an agreement does not always have to follow a formula of negotiation by way of offer and acceptance, and I am able to infer the existence of a contract from the acts of the parties, as well as or in the absence of words:Brambles Holdings Ltd v Bathurst City Council, [71] [81]. 89 Mr Martin gave evidence that there were discussions to deal with the finalisation of the 2006 financial accounts of Cadeng. Those discussions took place between Mr Martin, Mr Bray and Mr Matthew Salmon, a partner in MJC Partners Pty Ltd, Cadeng's accountants, at a time when Mr Salmon was in Broome. Mr Martin's evidence was that during those discussions, Mr Bray and Mr Salmon said to him that he would be receiving a bonus for the year ending 30 June 2006, of $150,000. Mr Martin was unable to place a date on when exactly the discussions about this bonus took place, other than to say it was at a time when discussions were held to finalise the 2006 accounts. 90 Mr Bray denied that such a discussion took place and said that he never agreed to pay a bonus of $150,000 to Mr Martin. 91 Mr Martin referred to an entry in Cadeng's 2006 financial accounts, in the profit and loss statement, where an amount of $150,000 was recorded as an expense described as 'bonuses'. His evidence was that this reflected the agreement to pay him the $150,000 bonus. (Page 20)
92 Mr Matthew Salmon of MJC Partners gave evidence of his dealings with Mr Martin and Mr Bray and the accounting entry for the bonus in the 2006 financial accounts. MJC Partners undertook what Mr Salmon described as 'compliance accounting' for Cadeng, with the client supplying all of the information which recorded transactions and MJC Partners preparing the profit and loss, balance sheet and tax return based on that information. From the time that Mr Martin came to be employed by Cadeng and subsequently Broome Mining, Mr Salmon's dealings about Cadeng's accounting matters were with Mr Martin, with only very rare discussions with Mr Bray. Mr Salmon's evidence was that he had been to Broome only twice, once in about April through to June 2007 and the other occasion about three or four years previously. These visits were organised by Mr Martin, and during those visits Mr Salmon dealt with Mr Martin about a number of financial matters, not just the accounts. 93 As to the 2006 accounts, the evidence given by Mr Salmon, which was not challenged in cross-examination and which I accept, was that when discussing the 2006 financial accounts, he recalled Mr Martin saying that there was going to be a reasonably sized profit for the 2006 year, but he felt that the company really could not afford to pay the tax on that profit. Mr Salmon said that he and Mr Martin then discussed whether there were any expenditures that could be brought to account legitimately. 94 As to the bonus recorded in the 2006 financial accounts, Mr Salmon gave evidence that Mr Martin told Mr Salmon 'to accrue a bonus for $150,000 that was payable to him'. Mr Salmon stated that he had no discussion with Mr Bray about this $150,000 bonus and Mr Bray was not at any meeting when that bonus was discussed. Although challenged about this in cross-examination, Mr Salmon was certain that whenever the bonus was discussed Mr Bray was never there, and the time which he spent with both Mr Martin and Mr Bray together was minimal. Mr Salmon impressed me, by the way he gave his evidence and his demeanour in answering questions, as both a truthful and reliable witness and I accept his evidence. 95 I consider it inherently improbable that Mr Bray agreed to pay Mr Martin a bonus of $150,000, when regard is had to the fact that Cadeng could not afford to pay tax, the amount of the other bonuses that were paid to Mr Martin in 2007 and 2008, and Mr Martin's salary at the time. The bonus which he says was agreed to was very close to his annual salary and five times the bonus payment paid on 3 September 2007, which was paid within months of the alleged agreement for the $150,000 bonus. (Page 21)
96 I also do not accept that the accounting entry in Cadeng's 2006 accounts reflects an agreement to pay Mr Martin a $150,000 bonus. On Mr Martin's evidence the bonus agreement was made after the end of the 2006 financial year, when the accounts for that year were being finalised. According to the evidence of Mr Salmon, which I accept, an entry like this, if relied on as an allowable deduction for the company, could only be included in the accounts for the year ending 30 June 2006 if the liability had been accrued during that year. In order for the liability to have been accrued, there must have been a commitment to pay that bonus made before 30 June 2006. Even on Mr Martin's evidence, no such commitment was made before 30 June 2006 and nor could there have been, since an agreement to pay a bonus would be based on the company's performance for the previous financial year. The entry of the bonus of $150,000 in Cadeng's 2006 financial accounts is not consistent with the agreement which Mr Martin alleges was made. 97 Based on the matters I have set out in [92] [96] above, I am not satisfied, on the balance of probabilities, that there was any bonus agreement as Mr Martin has alleged. 98 There were, however, some other matters raised in evidence relevant to Mr Martin's claim that an agreement had been made for payment of the $150,00 bonus. This included evidence concerning other accounting entries made in the financial accounts of Cadeng, and discussions concerning payment of the bonus. It is necessary for me to consider all of the circumstances, including what was said and done by the parties after the alleged agreement. Evidence of post-contractual conduct is admissible on the question of whether a contract was, in fact, formed: Brambles Holdings Ltd v Bathurst City Council [25]; Morrison v Town of Victoria Park [2007] WASCA 164 [18]. 99 Mr Martin gave evidence that there were subsequent discussions about payment of the bonus. He said 'I believe there was a discussion on deferring it'. That discussion took place, he said, with Mr Salmon and Mr Bray. Mr Martin's recollection was that he was 'simply told by both' that it was getting deferred. He could not recall when that discussion was, but thought it took place within April 2007 - 2008, just before the completion of the 2007 annual accounts. This evidence was vague, particularly as to time and place. The timing of this discussion falls within the same time range as the initial negotiations and agreement for the bonus, which is in itself unlikely. I do not accept this evidence in light of Mr Salmon's evidence about his limited visits to Broome and the fact (Page 22)
that Mr Bray was not present during any discussion which Mr Salmon had with Mr Martin about the bonus. 100 Mr Martin admitted that he did not do anything about following up payment of the bonus.He gave an explanation as to why he had not asked for payment: What steps did you take to obtain payment of that bonus?---Well, I didn't ask - I haven't asked for it. I haven't asked for it until, I suppose - let's describe it as the wheels came off the cart. Why was that?---Well, I kind of viewed it as something that could form part of my superannuation or retirement, if I wasn't paid it, you know, immediately or now or at any particular point in time. At that stage I wasn't financially strapped in any way and I didn't have any need to ask for it, so I didn't ask for it. 101 I am unable to accept this explanation as given by Mr Martin. He gave evidence of the care he took in organising the financial affairs of Cadeng and Broome Mining. He also agreed he took some care in drafting the employment contract. I find it extraordinary that he took no care to follow up payment of a bonus which was a very large amount, not much less than his annual salary from 1 July 2008 and far greater than other bonuses which had been paid to him. Given Mr Martin's legal and financial experience, I consider it most unlikely that, even if he did not need the money at the time, he would not have taken some step to ensure or secure payment of the bonus. His conduct in not demanding or following up the payment of this bonus is, in my view, inconsistent with the earlier formation of an agreement that he would be paid a bonus of $150,000. 102 In the 2007 financial accounts of Cadeng, the recording of the amount of $150,000 for bonuses in the profit and loss statement had been removed. Mr Martin in his examination-in-chief was asked what the 2007 financial accounts showed about a bonus and he stated: Well, what the profit and loss shows is that it's still in the accounts in 2006 and it has disappeared out of the accounts. It has been removed from the accounts in 2007, which in real terms confirms and reflects postponement of the payment. 103 In early April 2009 Mr Martin received an email from Mr Pham of MJC Partners, who reported to Mr Salmon. Attached to this email was a minute of a Cadeng director's meeting which read: (Page 23)
It was resolved that bonuses declared in the 2007 financial year owed to Dennis Martin are still outstanding as at the 30th June 2008. This is due to severe cash flow issues that have prevented the due payment. It was made apparent that the debt will be repaid as soon as cash flows allows. [sic] 104 Mr Martin's evidence was that this was 'a minute of a Cadeng meeting in relation to the bonus payment that was payable to me'. 105 Mr Martin gave this attached minute to Mr Bray, who returned the minute signed, but in an amended form. The amendment was to remove Mr Martin's name and put in its place the name of Mr Bray's daughter, Cassandra Russell, who was also at the time employed by Cadeng. Upon receiving this amended minute Mr Martin sent it to both Mr Pham and Mr Salmon at MJC Partners, in two separate emails dated 8 April 2009. The email to Mr Pham said only 'Minutes attached as requested' and the email to Mr Salmon said 'Sorry Matt. Forgot to copy you'. 106 Mr Martin gave an explanation as to why he had sent this amended minute back to Mr Pham and Mr Salmon: … I did not prepare this document - that put Cassandra Russell's name into this document. I may well have sent it but it was under instructions. I did not send this because it even refers to a year that there was no bonus. There is no reference to a bonus to Cassandra Russell in year 2007. It's not in the accounts. This was a response to MJC simply wanting a confirmation of the bonus that was paid to me. 107 Mr Martin had earlier stated in his evidence that the reference in the 2007 financial year in this amended minute had been 'another change' to the minute, however, the original minute as sent by Mr Pham also referred to the bonus owed to Mr Martin as 'declared in the 2007 financial year'. Yet Mr Martin had no difficulty in stating that the original minute related to the bonus which was due to him. 108 Mr Martin made no protest at the substitution of Cassandra Russell's name for his name in the minute which he said specifically dealt with the bonus owed to him. He also said nothing about the incorrect reference to the financial year. It is, in my view, highly improbable that if the accounting entry was in fact a record of the bonus agreement, Mr Martin would not have protested, or complained or said something about this, either before or at the time of sending the amended minute to Mr Pham or Mr Salmon. In my view, Mr Martin's conduct at that time in failing to protest at the substitution of Ms Russell's name in the minute as the person to whom the bonus was to be paid, and then returning the amended minute to Cadeng's accountants without raising any issue about either the (Page 24)
payee's name or the financial year referred to, is inconsistent with the earlier formation of an agreement that he was to receive a bonus of $150,000. 109 Another matter which in my view is inconsistent with the earlier formation of a $150,000 bonus agreement is the absence of any demand or discussion about the $150,000 bonus in the letter of 9 July 2009. I have construed this letter as containing an offer, and part of the offer dealt with bonuses which, as I have already noted, did not relate to this bonus of $150,000. If there was, in addition to the bonuses addressed in par 10 of the letter of 9 July 2009, an amount of $150,000 truly owed by Cadeng to Mr Martin, I would have expected that to be addressed in this letter. It was not. 110 There are two further aspects of the evidence which I need to address. 111 First, I heard some evidence from both Mr Bray and Mr Salmon about the later reversal of the accounting entry for the bonus of $150,000 in Cadeng's financial accounts. Mr Salmon was only instructed to undertake the reversal in late 2010, after the commencement of this action. In addition, I heard submissions concerning why the bonus was recorded in the first place, including reference by counsel for Cadeng and Broome Mining to 'creative accounting'. 112 Secondly, Mr Martin also sought to support his claim for the $150,000 bonus by referring to another accounting entry in the 2006 financial accounts of Cadeng relating to directors' fees of $150,000. He gave evidence that there was a discussion about a dividend to Mr Bray of $150,000 in the same year. Mr Salmon's evidence, which I accept, is that Mr Martin was the person who indicated that those directors' fees were payable to Mr Bray, and Mr Salmon never had a discussion about those fees with Mr Bray. The amount for the directors' fees was reduced in the following year's accounts to a sum of $120,000. Submissions were made to me, by counsel for Mr Martin, as to the reasons why that directors' fees entry was not reversed, while the $150,000 bonus fee entry was. 113 I do not consider it is necessary for me to make any conclusive finding concerning these two matters. I have already found, for the reasons I have already discussed at [96], that the recording of bonuses of $150,000 in Cadeng's 2006 financial accounts is not consistent with the agreement which Mr Martin alleges was made. The evidence concerning (Page 25)
the reversal of the accounting entry for the bonus and what was or was not done concerning directors' fees does not alter my finding, particularly when I take into account the evidence from Mr Salmon, whose evidence I accept, and the evidence of Mr Martin's own subsequent conduct, which I have found is inconsistent with an agreement that Cadeng would pay him a bonus of $150,000. Mr Martin's subsequent conduct undermines his credibility and confirms the view I reached at [97] based on the evidence of what was said and done at the relevant time of the alleged agreement. 114 I am not satisfied that Mr Martin's evidence about the alleged bonus agreement is either credible or reliable. I am not satisfied on the balance of probabilities that there was any agreement made between Mr Martin and Mr Bray that a bonus of $150,000 would be paid by Cadeng to Mr Martin. This part of Mr Martin's claim must be dismissed.
Damages 115 The general principle is that when assessing damages for breach of contract, the plaintiff is to be put in the position that he or she would have been in but for the breach, that is, the position if the contract had been performed: Wenham v Ella (1972) 127 CLR 454, 471. In this case, the employment contract provided for a period of 12 months' notice or payment of 12 months' salary in lieu of notice and Mr Martin's claim is for damages based on his salary for that 12-month period: Reilly v PraxaLtd[2004] ACTSC 41, [25] and [32]. 116 Mr Martin gave evidence of a number of attempts he had made to find work after the termination of his employment. None of the evidence about his attempts to find work was disputed and it was neither pleaded nor suggested by the defendants that he had failed to mitigate his loss. 117 At the time of the termination Mr Martin's annual salary was $174,362 plus superannuation. There was no issue that Mr Martin would be entitled to damages based upon his salary at the relevant time, plus superannuation at the usual rate of 9%. 118 In the case of a breach of a term of an employment contract to give notice of termination, damages should be calculated by reference to the gross amount of what the employee would have earned during the notice period and there should be no deduction for tax that would otherwise be paid: Reilly v Praxa[33]; Garbett v Midland Brick Company Pty Ltd [2003] WASCA 36; (2003) 129 IR 270 [103]; RoganGardiner v Woolworths Ltd [No 2] [2010] WASC 290 [187]. (Page 26)
119 Damages should be awarded to Martin accordingly, based on his gross annual salary at the time of $174,362, plus superannuation. 120 The evidence shows that during the 12 month notice period, after 14 July 2009, Mr Martin received payment of one week's salary from Cadeng, albeit at a reduced rate. Cadeng's payment records show that for the week from 15 to 21 July 2007, Mr Martin received a sum $2,600. That sum should be deducted from the amount of $174,362. 121 Mr Martin also gave evidence that at the beginning of August 2009 he received another payment from Cadeng. This related to accrued leave entitlements, which Cadeng had, in the letter from its solicitor dated 14 July 2009, indicated would be paid. In cross-examination Mr Martin agreed that the sum he received was about $16,000, although he said the figures were wrong. As this payment represents accrued leave entitlements, I do not consider it appropriate to deduct this amount from the damages: Reilly v Praxa [32]. 122 The total damages which should be awarded to Mr Martin is therefore $171,762, plus superannuation. Superannuation on $171,762 at 9% is $15,459. 123 I am prepared to allow pre-judgment interest on the total damages of $187,221, pursuant to s 32 of the Supreme Court Act 1935, from 15 July 2009 to the date of judgment. When computing interest for the purposes of s 32 of the Act, I may use the rate of interest prescribed or the purposes of s 8 of the Civil Judgments Enforcement Act 2004: see 0 36 r 20 of the Rules of the Supreme Court 1971. Applying the statutory interest rate of 6% for judgments pursuant to cl 4 of the Civil Judgments Enforcement Regulations 2005, I calculate interest to be $20,220 (6% x 1.8 years). 124 The total amount for which judgment should be entered for damages plus interest is therefore $207,441.
Conclusion and orders 125 My findings relevant to the issues in this case as I outlined at the commencement of these reasons are: (Page 27)
3. Cadeng terminated the employment contract by letter dated 14 July 2009, when it was not entitled to do so, without notice or payment in lieu of notice. Mr Martin is entitled to damages for that wrongful dismissal. 126 The claim against Broome Mining should be dismissed. 127 There should be judgment for Mr Martin against Cadeng in the total sum, inclusive of interest, of $207,441. 128 I will hear the parties on the terms of the orders I should make, and also as to costs.
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SCHEDULE Letter dated 9 July 2009 (Addressed to Mr Bray, Director, Cadeng Pty Ltd) 1. I have been consulted by Mr Dennis Martin regarding his employment with Cadeng Pty Ltd ('the Company') and have to hand a copy of his Contract and various emails passing between you and my client. 2. My client has been employed as the Financial Controller and Administration Manager of the Company for the past 7½ years. Until March of this year, my client has been solely responsible for all things connected with that role. 3. Since March you have prevented my client performing his role. It has now reached the point whereby my client's position within the Company has become redundant as you have effectively prevented him carrying out his usual functions. 4. In addition (and the emails passing between you and my client confirm the situation), you have taken to bullying my client. Some of your allegations contained in the various emails will be addressed below, but generally speaking the emails are seeking to bully my client. 5. As a result of your bullying, my client is unfit for work and his unfitness for work is a direct result of the stress caused by your emails and behaviour towards my client. 6. In response to specific points in emails the following points are made: 1. Use of Company Vehicle (April 8, 2009): My client has, since his employment with you, at times not used his vehicle whilst at work and you have been well aware of this for the duration of his employment. 2. Purchase Orders (July 3, 2009): Your insistence of a purchase order for a minor repair is unwarranted. I am instructed that your bullying commenced as a direct result of my client trying to convince you that substantial purchases/spending by you for purchases not connected with the business needed to be substantiated by you and (Page 29)
your recent email to my client about this issue supports my client's concern. 3. Hours of Work (July 4, 2009): As you are aware, my client has worked tirelessly for you for 7½ years, generally working 7 days a week and yet you have seen fit to accuse him of being tardy. I [note] that you have emailed my client about this matter outside of his working hours (on a Saturday) supporting the fact that not only are you harassing and bullying my client but also that my client invariably works throughout the week and the weekend. 7. I note that you seek an apology from my client (July 4, 2009 email). After taking instructions, it is clear that no apology is warranted. Your behaviour towards my client is intimidatory and inappropriate. 8. I note further that your email of July 4, 2009 effectively threatens to terminate my client's employment by citing minor and trivial issues which have not been cause for comment in the past. It is clear that you are attempting to find an excuse to terminate my client and therefore avoid paying him his entitlements. You are hereby put on notice that any attempt to terminate my client's employment with you for supposed breaches will be brought to the attention of the relevant Commission. 9. As a result of your behaviour and your action in making my client's position redundant, my client is entitled to the following: 1. A year's salary being redundancy pay together with an additional 30 weeks salary (7½ years x 4 weeks per year); 2. Holiday pay plus leave loading; 3. Leave loading for the 'holidays' taken in 2007/2008. Leave loading was never paid for those 'holidays'. I am instructed that in fact whilst taken as holidays, my client worked the entire time he was away. My client is not intending to make an issue about that presuming this matter is settled amicably; and 4. Pro Rata Long Service Leave. (Page 30)
10. I am instructed that given the service my client has extended to Cadeng during his employment he has been paid bonuses and an agreement is in place that bonuses and a substantial payment will be made to my client when the business is sold in recognition of the fact that on 2 occasions the business/company has been in dire financial trouble and my client has been responsible for turning the Company's finances around. 11. On the basis that my client's entitlements are paid within the next 14 days (together with sick leave until that time), my client will not seek to enforce the oral contract between you and my client. 12. Please ensure that all communications are directed to me and that no further emails or communications whatsoever are directed at my client. Yours faithfully (Solicitor for Mr Martin)
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